Supporting the Creative Economy

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House of Commons Culture, Media and Sport Committee

Supporting the creative economy

Third Report of Session 2013–14

Volume II Additional written evidence

Ordered by the House of Commons to be published 11 September 2013

Published on 26 September 2013 by authority of the House of Commons London: The Stationery Office Limited

The Culture, Media and Sport Committee

The Culture, Media and Sport Committee is appointed by the House of Commons to examine the expenditure, administration and policy of the Department for Culture, Media and Sport and its associated public bodies.

Current membership Mr John Whittingdale MP (Conservative, Maldon) (Chair) Mr Ben Bradshaw MP (Labour, Exeter) Angie Bray MP (Conservative, Ealing Central and Acton) Conor Burns MP (Conservative, Bournemouth West) Tracey Crouch MP (Conservative, Chatham and Aylesford) Philip Davies MP (Conservative, Shipley) Paul Farrelly MP (Labour, Newcastle-under-Lyme) Mr John Leech MP (Liberal Democrat, Manchester, Withington) Steve Rotheram MP (Labour, Liverpool, Walton) Jim Sheridan MP (Labour, Paisley and Renfrewshire North) Mr Gerry Sutcliffe MP (Labour, Bradford South)

The following members were also a member of the committee during the parliament: David Cairns MP (Labour, Inverclyde) Dr Thérèse Coffey MP (Conservative, Suffolk Coastal) Damian Collins MP (Conservative, Folkestone and Hythe) Alan Keen MP (Labour Co-operative, Feltham and Heston) Louise Mensch MP (Conservative, Corby) Mr Adrian Sanders MP (Liberal Democrat, Torbay) Mr Tom Watson MP (Labour, West Bromwich East)

Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk.

Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/cmscom. A list of Reports of the Committee in the present Parliament is at the back of this volume.

The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some of the written evidence are available in a printed volume.

Additional written evidence is published on the internet only.

Committee staff The current staff of the Committee are Elizabeth Flood (Clerk), Grahame Danby (Second Clerk), Kevin Candy (Inquiry Manager), Emily Gregory (Senior Committee Assistant), Keely Bishop (Committee Assistant) and Jessica Bridges-Palmer (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the Culture, Media and Sport Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6188; the Committee’s email address is [email protected]

List of additional written evidence

(published in Volume II on the Committee’s website www.parliament.uk/cms.com)

Page 1 Imperial War Museums Ev w 1 2 Paul Kaynes – London 2012 Ev w 3 3 Equity Ev w 4 4 Musicians’ Union Ev w 7 5 Association of Authors’ Agents Ev w 11 6 Ivor Hall Ev w 12 7 International Broadcasting Trust Ev w 14 8 Onedigital Ev w 17 9 Tate Ev w 22 10 The Newspaper Society Ev w 23 11 Voice of the Listener and Viewer Ev w 25 12 Professional Publishers Association Ev w 28 13 The Royal Borough of Kensington and Chelsea Ev w 30 14 Design and Artists’ Copyright Society (DACS) Ev w 31 15 Creative Scotland Ev w 33 16 Victoria and Albert Museum Ev w 41 17 Crafts Council Ev w 44 18 The Society of Authors Ev w 50 19 Independent Film and Television Alliance (IFTA) Ev w 52 20 Workspace Group Ev w 57 21 LOCOG Ev w 60 22 The Brighton Fuse Ev w 62 23 UKTV Ev w 66 24 The Film Distributors’ Association Ev w 69 25 Make Me Laugh Research Project Ev w 73 26 Creators’ Rights Alliance Ev w 76 27 Radio Independents Group (RIG) Ev w 81 28 Teledwyr Annibynnol Cymru (Welsh Independent Producers) TAC Ev w 84 29 Motion Picture Association Ev w 86 30 Creative Coalition Campaign Ev w 89 31 Incorporated Society of Musicians (ISM) Ev w 93 32 Children’s Media Foundation Ev w 96 33 National Museum Directors’ Council Ev w 100 34 Demos Ev w 103 35 Centre for Fashion Enterprise (CFE) and Designer-Manufacturer Innovation Support Centre (DISC) Ev w 108 36 Associate Parliamentary Design and Innovation Group (APDIG) Ev w 111 37 Penkat Studio Ev w 114 38 Consumer Focus Ev w 115 39 Buckinghamshire Thames Valley LEP Ev w 119

40 Creative Access Ev w 122 41 Creative England Ev w 125 42 Advertising Association Ev w 128; Ev w 132 43 Cultural Learning Alliance Ev w 134 44 Birmingham City University Ev w 136 45 Entertainment Retailers Association Ev w 138 46 Radio centre Ev w 140 47 Local Government Association Ev w 145 48 Next Gen Skills Ev w 147 49 Stop43 Ev w 148 50 CBI Ev w 152 51 BT Ev w 154 52 National Writers Union Ev w 157 53 Edge Investment Management Ev w 158 54 British Library Ev w 161 55 Activision Blizzard UK Ltd Ev w 165 56 The Chartered Society of Designers Ev w 167 57 City of London Corporation Ev w 169 58 Discovery Networks Ev w 169 59 British Fashion Council Ev w 173 60 Greater London Authority Ev w 177 61 Josie Barnard Ev w 181 62 Live Music Forum Ev w 184 63 Twentieth Century Fox Ev w 186 64 Letter from Chair to Prime Minister Ev w 197 65 Letter from Prime Minister to Chair Ev w 198 66 Letter from Chair to the British Olympic Association Ev w 198 67 Letter from the British Olympic Association to the Chair Ev w 198

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Written evidence

Written evidence submitted by Imperial War Museums Summary IWM has made a very significant contribution to the creative economy. This can be demonstrated in the following ways: — Film—IWM’s moving image collection was the world’s first film archive. Now, we run an annual film festival, open to students and amateur filmmakers, it is a public showcase for innovative work that incorporates archive footage from IWM or responds to IWM exhibitions and collections more broadly. — Publishing—our collections are rich and diverse. As such, they have provided inspiration for a wealth of authors, from The Night Watch by Sarah Waters to the Regeneration trilogy by Pat Barker. We also publish a large range of books linked to our exhibitions and archives. These books are published in-house as well as in partnership with other publishers. — Art—our collection is one of the most important representations of twentieth century British art in the world. It includes many great works of art from the British government war art schemes of the First and Second World Wars. Today we continue to commission artists such as Steve McQueen, Roddy Buchanan and Susan Philipsz, and the collection reflects recent and contemporary conflicts including Northern Ireland, the Falklands, Bosnia, Iraq and Afghanistan. — Architecture—at IWM London, we are working with Foster + Partners to deliver an innovative architectural design that will transform our flagship branch. We recently opened a stunning sculptural bronze entrance at the Churchill War Rooms. Our IWM North building, designed by Daniel Libeskind, is an iconic design which continues to inspire. — Engineering—IWM Duxford is the European centre of aviation history. The historic site, outstanding collections of exhibits and regular world-renowned Air Shows, combine to create a unique museum where history really is in the air. The conservation team at IWM Duxford are primarily responsible for the restoration, conservation and maintenance of the large and aircraft and vehicle collections at all of our branches, and as such, are leading experts on industrial conservation and engineering techniques.

1. Film 1.1 IWM’s moving image collection was the world’s first film archive. Now, we run an annual film festival, open to students and amateur filmmakers, it is a public showcase for innovative work that incorporates archive footage from IWM or responds to IWM exhibitions and collections more broadly. 1.2 The festival not only contributes to the professional training of young film and television producers, it also creates greater awareness of our film archive. Many of the winning students have gone on to successful careers in the film and television industry. 1.3 We seek to widen access to our collections in many different ways. The digitally restored IWM film— The Battle of the Ancre and Advance of the Tanks (1917)—the official record of the British Army’s winter campaign on the Somme in 1916 and the sequel to The Battle of the Somme was premiered at BFI’s London Film Festival on Sunday 21 October 2012. The restoration was carried out by Prime Focus with the support of the Discovery Networks, and many staff in our Film Archive and Research have contributed to this project.

2. Publishing 2.1 Our collections are rich and diverse. As such, they have provided inspiration for a wealth of authors, from The Night Watch by Sarah Waters to the Regeneration trilogy by Pat Barker. We also publish a large range of books linked to our exhibitions and archives. These books are published in-house as well as in partnership with other publishers. 2.2 Our brand licensing programme is growing, with IWM products featuring in Waitrose, Fenwick and Lakeland shops. The licensing programme makes imaginative use of the richness of our collections, especially the strong art and photography holdings, and draws on the historical knowledge of IWM.

3. Art 3.1 Our collection is exceptional; it is one of the most important representations of twentieth century British art in the world. It includes many great works of art from the British government war art schemes of the First and Second World Wars. 3.2 It includes many great works of art from the British government war art schemes of the First and Second World Wars, which employed the greatest artists of their day, including leaders of the avant garde. These included Paul Nash, C R W Nevinson, John Singer Sargent and Sir William Orpen. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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3.3 Today we continue to commission artists such as Steve McQueen, Roddy Buchanan and Susan Philipsz, and the collection reflects recent and contemporary conflicts including Northern Ireland, the Falklands, Bosnia, Iraq and Afghanistan. 3.4 Important works from outside official schemes can also be found in the collection, by artists ranging from Edward Burra to Willie Doherty. The collection of almost 20,000 items includes paintings, prints and drawings, sculpture, and works in media such as photography, sound, and film. IWM also holds the unique War Artists Archive, which reveals the day-to-day running of the war art schemes and gives fascinating glimpses of the artists’ experiences. 3.5 The IWM Art Commissions Committee aims to commission original, ambitious artwork on contemporary conflict, a function and principle established at the Museum’s inception in 1917. IWM has a long and important tradition of official artist commissions dating back to the First World War which have resulted in some of the greatest works of art by British artists made during this period. 3.6 Steve McQueen was awarded the commission in 2003 to produce a work in response to British military operations in Iraq. The result of this commission was Queen and Country, a work that has been widely exhibited across the UK since its completion in 2007. Commemorating the British Service personnel killed during the Iraq conflict, the project takes the form of a series of postage stamp sheets featuring photographic portraits. It is both a tribute to those men and women who have lost their lives and a reflection upon the validity of war, the structure of power and notions of national identity. 3.7 The tour of this work (at over ten national venues) included Manchester Central Library as part of the Manchester International Festival, St George’s Hall as part of the Liverpool Biennial, the Scottish National Gallery of Modern Art in Edinburgh, Wolverhampton Art Gallery and the Middlesbrough Institute of Modern Art. 3.8 Queen and Country provides a tangible example of where and how IWM seeks to challenge audience perceptions and ideas and encourage deeper thinking about conflict, in particular through the lens of human behaviour. “This is the hardest thing I’ve ever done. Queen and Country is a particularly important and meaningful work for me in that it is a collaboration with the families of the deceased and potentially with the whole nation.” Steve McQueen “...In a very unusual way, with clarity and dignity, [this work] deals with the never changing fact that the real currency of war is not territory or fossil fuels but human lives.” Bill Woodrow, Chair of the IWM Art Commissions Committee 3.9 Art commissions allow IWM to sustain its relevance to and resonance with new and existing audiences. Most recently, Roderick Buchanan has been commissioned to produce a work in response to the legacy of the Troubles in Northern Ireland.

4. Architecture 4.1 In line with our masterplan for the IWM estate, we are delivering capital development plans that upgrade the visitor offer, improve the efficiency and commercial viability of our operation, and address longstanding collections storage issues. 4.2 At IWM London, we are working with Foster + Partners to deliver an innovative architectural design that will transform our flagship branch. 4.3 We recently opened a stunning sculptural bronze entrance at the Churchill War Rooms. The entrance was created by expert craftsmen to create a clear and striking entry point to a historic site of national significance (in a sensitive heritage context). 4.4 Our IWM North building, designed by Daniel Libeskind, is an iconic design which continues to inspire. It was the first building in the UK by the internationally acclaimed architect, Daniel Libeskind, who has also recently been behind the masterplan for the Ground Zero site in New York. 4.5 Clad in aluminium, IWM North’s landmark building is a visionary symbol of the effects of war. The jagged shape of the Air Shard stands out on the Manchester skyline. The design is based on the concept of a world shattered by conflict, a fragmented globe reassembled in three interlocking shards. 4.6 Daniel Libeskind commented: “When I began to work on the competition for Imperial War Museum North, I was deeply challenged by the notion of creating a place that was at once intimate and civic. A place in which the story of the significance, sacrifice, tragedy and destiny of conflict can come alive. My aim was to create a building, not only intelligently programmed for the events which were to take place in it, but one which emotionally moved the soul of the visitor toward a sometimes unexpected realization. Conflict is not simply a story with a happy or unhappy ending, but an ongoing momentum that structures one’s understanding of the future in relation to the past.” cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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4.7 Many of our visitors to IWM North are inspired by the building itself, and through our audience evaluation programmes, we understand how important the physical design of this site is in terms of establishing, and ultimately meeting, visitor expectations.

5. Engineering

5.1 As the European centre of aviation history, IWM Duxford is both a historic site, housing and displaying outstanding collections of exhibits and regular world-renowned Air Shows, and a popular visitor attraction.

5.2 A signiﬁcant part of the public appeal rests in the conservation in action work that can be viewed. The conservation team at IWM Duxford are primarily responsible for the restoration, conservation and maintenance of the large and aircraft and vehicle collections at all of our branches, and as such, are leading experts on industrial conservation and engineering techniques.

5.3 Our team of Conservation Ofﬁcers and Conservation Assistants are all highly experienced technical specialists, capable of dealing with the full spectrum of restoration and maintenance tasks, using a wide variety of equipment and tools to work on a broad range of materials, including different types of fabrics, woods and metals.

5.4 Our work is supported by many volunteers, who make an important contribution to a variety of conservation projects on site. We enjoy a worldwide reputation for excellence that could not be achieved without the contribution of these dedicated volunteers who work alongside our own full-time staff.

5.5 The Duxford Aviation Society membership exceeds 600. IWM Duxford has also run an HLF-funded National Aviation Heritage Skills Initiative programme which enrolled over 1,000 volunteers, all of whom received training aimed at increasing standards in heritage aviation conservation.

5.6 We contribute to the public enquiry service, particularly through talking to visitors in Hangar 5—the conservation area at IWM Duxford where visitors can see the work in action. We exchange information, and share expertise, with a large number of internationally renowned museums and other contacts in the heritage sector at an international level. The Duxford conservation team are now working on the conservation of large objects decanted from the IWM London site as part of the preparations for the Transforming IWM London capital development project. October 2012

Written evidence submitted by Paul Kaynes, West Midlands Creative Programmer, London 2012

I would like to make a submission to the Culture Media and Sport Committee inquiry regarding the Creative Economy.

Over the past four years there has been a large and diverse programme of arts and cultural activity staged by the cultural and creative industries in the West Midlands as part of the Cultural Olympiad and London 2012 Festival. This programme has had a number of beneﬁts and impacts on the area including: — £32.8 million of net economic impact as a result of visitors spending money at events and resources attracted into the West Midlands from outside the region. — £11 million of media coverage secured for the programme, much of it in national and international markets, for a programme of outstanding artistic events in the West Midlands. — A total of 2.9 million attendances at events, around 1 million of which were by people aged under 25.

Further information on the programme, together with a short document which summarises the ﬁndings earlier in the summer can be found here.1 A further, more detailed document will be published next week and we will send this to you when available.

The programme demonstrated that large scale, UK-wide high quality cultural programmes of this kind can offer high levels of return on investment economically, in terms of social inclusion—because of the volunteering and high levels of active participation offered—and for young people, especially in providing them with practical skills. The UK-wide nature of the programme has been crucial as it provided a high level of public awareness and engagement which couldn’t have been achieved by local events. October 2012

1 www.visitbirmingham.com/ﬁles/2012–09–39/35634Culturalolympics6ppA4proof2LR_tcm33–41273.pdf cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by Equity 1. Equity represents 36,500 performers and creative personnel working across the UK’s creative industries. Our members include actors, singers, dancers, variety artists, stage managers and stunt performers who work across various sectors including theatre, light entertainment, television, ﬁlm, video games and the music industry. 2. Given recent challenges faced by the creative economy and the sector’s importance as a driver of growth, Equity welcomes this timely Inquiry. If called to provide oral evidence, Equity ofﬁcials and members who appeared in the opening and closing ceremonies of the Olympic and Paralympic Games would be keen to elaborate on the experiences summarised in this submission and to discuss other areas covered in the call for evidence issued by the Committee.

Legacy of the Olympics, Paralympics & Cultural Olympiad 3. Equity was involved in several aspects of creative programme of the Olympics and Paralympics and was in regular contact with organisers in the lead up to, and during the Cultural Olympiad. The experience of representing and negotiating on behalf of performers taking part in the cultural aspects of these events was both positive and negative. 4. The high quality of talent on display at the ceremonies, from dancers to stunt performers, clearly demonstrated the logic of engaging the best of the UK’s professional performers, however the fact remains that the bulk of performers who took part, a further 10,000 people, were working for free, on a “voluntary” basis. 5. Across the four opening and closing ceremonies around 800 paid performers and stage managers were engaged. This represents the largest group of paid artists ever engaged for the Olympic and Paralympic ceremonies. Agreeing the contracting process for the 800 paid performers was, however, a long and complicated process. At the first formal meeting to discuss the matter in October 2011, LOCOG insisted that the performers and stage managers were to be engaged as independent contractors, paid on a fee-only basis. 6. Following protracted talks with Equity officials over a period of some months, LOCOG’s lawyers conceded that the performers were indeed workers and that National Insurance payments were due. The Equity “supported” agreement that was finally concluded in early 2012 secured basic rights around breaks, working time and a weekly payment of £600 for the contracted performers. Equity also arranged to have a permanent base at the Olympic Park in order to provide advice and support for performers during the rehearsal period in the lead up to the ceremonies. 7. The Cultural Olympiad presented fewer problems for performers, as the individuals and organisations involved in developing the programme had a better understanding and experience of how the sector works. That said, due to funding pressures, in reality much of the Cultural Olympiad was curated work, produced by partner organisations such as the Globe, which adhere to standard industry terms and conditions for performers. The extent of new work and in turn, new employment opportunities for performers and other creative workers is as yet unknown, but may become clearer in the evaluation process being conducted by the University of Liverpool. 8. In answering the key question posed by the Committee, namely what can be done to develop a legacy for the Games in terms of UK creative talent, Equity strongly believes that the status of performers as legitimate workers must be recognised. This was a running theme throughout the cultural programme of the Olympics and Paralympics and is indicative of a wider trend towards an expectation that performers will provide their services for free, even when working alongside other paid creative workers and support staff. 9. Clearly it is important for the creative economy to preserve a degree of flexibility with respect to the mobility of its workforce and the short-term nature of engagements. That is something that is expected and understood by performers and creators, many of whom value their own flexibility to work for different employers on projects that are temporary by their very nature. Nevertheless, the flexibility to engage workers on short-term projects, combined with incorrect perceptions about the industry, should not undermine the ability of performers, 85% of whom earn less than £20,000 per year from their work in the creative economy, to build sustainable careers. 10. Beyond the one-off events that took place in 2012, there is further evidence of the increasing vulnerability of workers in the creative economy. Alongside other members of the Federation of Entertainment Unions, Equity has been working to ensure that employers, and in particular, arts organisations and education establishments recognise their obligations under the National Minimum Wage Act. 11. Film schools have been a particular problem for the union. They often seek to rely upon section 44 of the National Minimum Wage Act to provide for non-payment of the NMW in return for work on student films, due to the fact that film schools are registered charities. Equity does not believe that this is the intention of the Act and has been encouraging film schools in particular to use the union’s own model agreement for student films. 12. Following Equity’s interventions, and support from Arts Council England, a number of employers have reversed their proposals to offer unpaid work. However this approach has a limited impact due to the fact that cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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it is reactive. Year on year Equity members and ofﬁcials are reporting that there has been an increase in the level of unpaid and low paid work being advertised in the entertainment industry under the guise of the voluntary worker arrangements, despite the fact that the union has successfully challenged a number of employers.

Funding and Finance 13. The factors which will sustain the UK’s competitive advantage in the creative industries are those which will enable creative organisations and businesses to continue to produce the best content in order to meet demand at home and abroad. The key interventions which will promote conditions for success are: sustainable funding for the arts, investment in public service broadcasting, a strategy for the film and video games industries, a fully functioning intellectual property regime and support for the grassroots of the creative industries including live entertainment. 14. The availability of a highly skilled and innovative workforce is clearly a core component of the current and future health of the UK’s creative economy. In 2010 nearly 9% of the UK’s businesses were found to be in the creative industries (a substantial proportion of which are SMEs) and 2.3m UK workers were employed in the creative economy. A number of issues must be considered if the creative industries are to provide sustainable and rewarding employment as well as deliver economic benefits. 15. Any significant cuts to public funding for the arts inevitably places the sustainability of many organisations at risk. This will impact on the employment, training and development opportunities available to actors, performers and creative professionals, whose contribution to the arts drives the success of the UK’s cultural offer nationally and locally. While national level cuts have been well documented, the pressures faced by local funders, and in particular local authorities, are much less well known. 16. The Local Government association predicts that by 2019–20 local authorities will have a funding gap of £16.5 billion—a 29% gap between funding and spending commitments. With this background, it is expected that discretionary areas of spending, including arts and culture will be hit hard and in many areas disappear completely. The Cultural and Leisure Officers Association estimate that local authority budgets for arts and culture have already been cut by 15% in 2012–13. 17. Equity has spoken out against these cuts and has engaged with leading employers in our sector, the Arts Councils, and our audiences to stress the economic and social importance of the arts. Our chief concern is that without investment in regional and local arts and culture we stand to lose the pathways for future creative talent, particularly talented individuals from underrepresented groups. It also increasingly apparent to artists and arts organisations that private giving and philanthropy will be able to plug the funding gap. 18. It has been a source of great disappointment that successive Coalition Secretaries of State for Culture, Media and Sport have neglected to meet with representatives of those working in the sector, despite several invitations. Junior Ministers in DCMS have however have engaged positively on issues including copyright and licensing reform. On the latter issue, the passage of the Live Music Act and the willingness of the Department to explore radical proposals to enable entertainment venues and artists not just to weather the recession, but grow and expand, has demonstrated what can be done when Government works with unions and other stakeholders. 19. Further reform of licensing law is necessary to assist those beyond the live music sector, particularly street performers, Punch & Judy shows, circuses and other forms of live entertainment and this is one area where coordination between Government Departments can slow delivery of policy objectives.

IP/Copyright 20. Equity is a member of the British Copyright Council and Equity’s General Secretary is Chair of the Creative Coalition Campaign. As such, we endorse the points made about implementation of the Digital Economy Act, the Hargreaves Review of Intellectual Property and the Enterprise and Regulatory Reform Bill in each of these organisation’s submissions. 21. Equity supports the need for a balanced set of copyright rules to ensure there are sufﬁcient incentives and rewards for creators and artists as well as ensuring access to creative content for consumers at a reasonable cost. The intellectual property framework that currently exists in the UK is largely successful in achieving this. 22. The rights that exist for audiovisual performers in the UK are limited, and have mainly been achieved through the inclusion of rights under contract, negotiated on their behalf by Equity. These mechanisms are designed to ensure that an artist beneﬁts from the success and continued exploitation of their performance. Combining various ongoing payments enables performers who have itinerant and unpredictable working patterns to build sustainable careers. Low pay is endemic in the entertainment industry and without additional payments the diversity and breadth of talent in the UK creative sector could be lost. For this reason, two key areas of reform, recommended by the Hargreaves Review, are of particular concern to performers. 23. Equity is strongly opposed to a format shifting exception being introduced into UK law without fair compensation for rights owners. The most effective compensation mechanism of which we are aware is a cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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system based on private copying levies, as operates in most other European countries, or a licence based upon similar principles. 24. There is also a lack of economic evidence to support a new exception for parody. Parody is already widespread and part of the existing tradition of free speech in the UK. The introduction of such an exception could also have unintended negative consequences for performers and would not be in interests of the UK creative economy, particularly given there is no proposal to strengthen moral rights for performers as part of this change.

Tax Reliefs 25. Equity supports the introduction of new creative tax reliefs and hopes that projects which have moved abroad will now consider returning to the UK. Assistance from tax reliefs may also mean that previously unviable productions will now be made, creating jobs for performers and other creative workers. 26. Equity does however have some concerns that the definition of ‘high end television’ as envisaged by the Treasury will not necessarily apply to children’s drama and other important and marketable productions. For example, under the tariffs system which governs BBC spending on programmes, budgets for commissioned productions differ by BBC Channel and consequently some genres may miss out on the new incentives. Tariffs for prime time drama output on BBC1 such as Great Expectations, shown in 2011, are set at £1 million+ per hour, whereas on CBeebies tariffs are set closer to £40,000 per hour for children’s drama programmes such as the popular Tracey Beaker series. There are similar differences between the tariffs that apply to BBC1 and BBC4/BBC3 drama and comedy productions. 27. Drama and comedy production for children has declined substantially over the last decade, despite the recognition of the importance of this genre by Government. If the new tax relief for high end television is an unsuitable means of supporting the sector, the Treasury may wish to consider how producers of children’s drama and comedy content could access alternative assistance. 28. As with the film tax relief regime, new tax breaks for high end television must also go hand in hand with the promotion and use of standard industry contracts for those engaged on productions. Actors, stunt performers and other creative workers must, as far as possible, be remunerated in line with existing industry standards and union agreed rates of pay will be if the industry wishes to maintain sufficient depth and breadth of expertise to meet the demands of British and international producers. 29. Recent experience Equity has had of productions being made outside of the UK demonstrates that there has been, to some extent, a race to the bottom in terms of contracts being offered to performers. Earlier this year the BBC commissioned UK-based independent production companies to produce three large-budget programmes in the Irish Republic for transmission in the UK: Loving Miss Hatto, Vexed and Ripper Street. 30. Equity had two concerns about these productions. The first was that the independent production company concerned had announced that it would not use the standard Equity contract agreed with PACT, which is designed specifically to meet the needs of independent productions. The second concern was that the productions were being made outside of the UK and in particular were not being filmed in Northern Ireland despite the BBC’s commitment to increasing production in the UK’s Nations to 17% over the next four years. 31. In terms of the video games industry, Equity members work in development studios in a number of roles including directing, voiceover and motion capture. Performance capture is a relatively new field for actors, involving the digital capture of an actor’s movements to aid game animators in creating realistic characters. As video games become more and more sophisticated, the use of actors to enhance the in-game experience has evolved and expanded. 32. The video games industry does not have levels of coverage by collective bargaining or codes of conduct governing working practices and terms and conditions comparable with other areas of the media and entertainment industries. It is hoped that tax reliefs will enable the video games industry in the UK to create jobs. Government must press upon the videogames industry the need to engage with trade unions organising and representing workers in the sector, to ensure that skills and talent are retained and that the highest possible employment standards are adhered to across the media and entertainment industries.

Skills and Training 33. Training and development opportunities for young people entering the creative sector are already under threat due to higher education funding cuts and higher levels of tuition fees. There are also difficulties in retaining the skills and experience our members have studied for at university, drama school, film schools and conservatoires as arts cuts affect the number of work based learning opportunities arts organisations can provide. 34. Recognising the need for extra support, Equity, Skillset and the Union Learning Fund have worked in partnership to recruit freelance careers and learning advisors to deliver guidance to performers. However, these measures are not sufficient to provide the full range of training and development required, particularly by the audiovisual industry. The sector itself should play a greater role in addressing skills needs. A more concerted effort to address the need for specialist training in screen acting would be particularly welcome. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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35. The entertainment industry is characterised by informal recruitment practices and this often requires new entrants to undertake unpaid work in order to develop a portfolio and contact networks. For many, particularly those coming from non- traditional backgrounds, this is only possible if access to JSA and associated benefits is available during this formative phase of a performer’s career. 36. While there are elements of the new welfare system which will allow recipients to benefit from doing small amounts of irregular work, Equity has alerted DWP that under the new arrangements for JSA and Universal Credit it does appear that our members would become subject to greater conditionality and to a sanctions regime which is designed for workers in non-itinerant occupations. 37. Equity provides specialist tax and benefits advice to its members. Our advisors have noted an increase in calls and enquiries from distressed members concerning the misapplication of the new sanctions regime. New guidance for personal advisors in Jobcentres and working on the Work Programme on issues such as the dual status of performers under the tax and National Insurance regimes is urgently needed, as well as training on how to exercise discretionary powers in a manner appropriate to the working patterns and practices of the entertainment industry.

Hubs 38. Equity’s concerns about the “hub” approach mainly relate to the spread of employment opportunities in the audiovisual industries. Currently employment in film and television production is heavily concentrated in London and the South East. Performers in the UK’s nations and regions often struggle to find enough employment to sustain a career in the entertainment industry and many are forced to relocate to London in order to access opportunities. 39. During the consultation conducted by Creative England in 2011 Equity raised concerns about the proposed ‘hub’ model, which we feared may result in resources shifting towards the West of England. While we acknowledged that Creative England’s ‘hub and spoke’ model was intended to provide outreach to centres beyond Bristol, Birmingham and Manchester, we were nonetheless concerned that important creative centres, where many Equity members live, such as Newcastle, Yorkshire and East Anglia may lose out. 40. At the start of 2012 Equity launched the “Broadcasting in the Nations” campaign to increase the number of programmes made in Wales, Scotland and Northern Ireland. According to Ofcom, 61.8% of spending by public service broadcasting channels in 2010 went to productions made within the M25. Productions in Scotland received 4.6% of spending, Wales 2.6% and Northern Ireland 0.4%. 41. While there some examples of good practice such as Game of Thrones and Da Vinci’s Demons, filmed in Northern Ireland and Wales respectively on Equity contracts, in most cases when shows are made in the nations, there are few—if any—opportunities for performers in the nations to appear in them. October 2012

Written evidence submitted by the Musicians’ Union 1. The Musicians’ Union (MU) represents over 30,000 musicians working in all genres of music. As well as negotiating on behalf of our members with all the major employers in the industry, we also offer a range of services tailored for the self-employed by providing assistance for professional and student musicians of all ages.

How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games 2. Although the MU welcomes the success of the recent Olympics and Paralympics, we would also like to highlight some serious problems that our members faced. 3. Despite the agreement between LOCOG and the TUC regarding fair terms and conditions and undertakings from LOCOG to the MU that professional musicians would be paid for their services, the MU uncovered countless examples of its members being asked to perform for no payment at events connected with the Games. 4. We would be happy to provide detailed examples if we are called to give oral evidence to the Committee. 5. Of course, we all praised the contribution of the volunteers this summer—but professional workers were supposed to be paid a fair rate for their work. 6. The argument used was that it would be good exposure—but this just wasn’t the case. Most of the “free work” was taking place in the Olympics Village or at gigs to celebrate the Olympics. Managers and record companies weren’t going to be walking by and signing people on the spot. It was just a way of getting free labour. By that rationale, shouldn’t the police, politicians and construction workers also have been working for free, for good exposure? cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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7. For headline artists who are already well known, the offer of exposure can often be a good enough reason to accept free live work as they can promote a new album or tour. In addition, very well off artists may well choose to do charity gigs for free and we would not argue against this. It is important to remember though that there are only very few well off artists at the top of the profession. Most of the musicians we are talking about are gigging musicians who absolutely rely on income from live work.

8. We believe that too many people seem to think that music and entertainment are a hobby rather than a career, and are unaware of the years of training and hard work that it takes to become a professional performer. This leads to performers being asked or expected to work for free in far too many instances.

9. Music is already a difﬁcult career to sustain because, unless you make it to the very top, it is so poorly paid. Most of the MU’s 30,000 members already have to do other jobs alongside music in order to make ends meet, and 76% of musicians in the UK earn less than £30,000 per year. If the situation continues to get worse then a career in music will only be a possibility for those from wealthier backgrounds.

10. It has become common for people to argue that intellectual property (IP) is a barrier to growth, but this is totally untrue when it comes to growth in the creative industries.

11. IP rights are intended to protect creators and performers and help to make their careers viable—and the Government’s IP policy should reﬂect this ﬁrst and foremost. The MU is disappointed that copyright is increasingly being referred to as an impediment to business and growth and we believe that the focus must be brought back to how performers’ rights protect musicians and artists, who would be unable to maintain a career without them.

12. Only a small number of MU members have regular salaries. Most are Small and Medium Enterprises (SMEs), whether they are sole traders or members of a band, and they therefore rely on their copyright and performers’ rights to make a signiﬁcant part of their income. In essence, their copyright and related rights are an important part of their “product” and of the diverse income streams that make up their income, and, like any SME they have to protect their product.

13. The MU has lobbied for the rights of performers ever since the 1920s. In all this time, we have never once seen a legitimate example of copyright creating a barrier to business and innovation.

14. During the ﬁnal stages of the term extension campaign in 2008–10, we managed to convince the Government that copyright was of beneﬁt to ordinary musicians as well as to big stars and record labels. It is disheartening that this appears to be being questioned again in recent IP policy reviews.

15. We would like all Government Departments to be aware of the needs of creators and performers, and for them to work with the British Copyright Council (BCC) to adopt a more pro-IP approach across Government. This is only likely to be achieved if the IPO itself moves away from its often negative attitude to IP and becomes a champion for these important rights and for UK innovators and creators.

16. We do not believe that the IPO is as effective as it should be, because it currently has the wrong priorities. In the recent Copyright Consultation, for example, the consultation focussed on assisting the deliverers of content rather than on protecting the creators of content. Although there was one passing reference to creators in paragraph 7.87—“The Government is committed to maintaining the incentives that copyright offers to authors and publishers”—there was no reference to performers at all. This attitude does not beﬁt a department that should have the needs of creators and performers at its core.

17. The MU also believes that there have been too many reviews into IP over the past few years—the Gower’s Review of Intellectual Property in 2005, the DBERR and DCMS report on Digital Britain, SABIP’s review of copyright, the IPO’s Developing a Copyright Agenda for the 21 Century in 2009, David Lammy’s review of moral rights in 2009, Taking Forward the Gowers Review of Intellectual Property in 2010, the Hargreaves review in 2011 and this year’s consultation on proposals to change the UK’s copyright system. The overlap and repetition that this engenders can only hamper the efﬁciency of the IPO.

18. Despite the large number of reviews, we feel that the IPO has not taken sufﬁcient notice of the improvements that we have said are needed to the related rights regime. We would be happy to give further information if required. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. the impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament) Hargreaves 19. The MU welcomed the Hargreaves recommendation to introduce a limited private copying exception which “corresponds to what consumers are already doing” and we believe that it is sensible that acts of private copying should no longer be considered illicit acts. We do, however, object to the multi-national companies who have made enormous amounts of money through the selling of iPods, mp3 players and other devices that enable format shifting not paying fair compensation to the performers. 20. The MU does not agree with Professor Hargreaves that the beneﬁt of format shifting “is already factored into the price that rights holders are charging”—the principle of fair compensation for performers and creators in return for a private copying exception is enshrined in Directive 2001–29/EC of the European Parliament. 21. Hargreaves seems to suggest that any fair compensation should be factored in to the price of the CD. This is wholly impractical in view of the fact that piracy and the buying power of the supermarkets has driven the price of CDs down to a record low and the market would not be able to sustain any increase. 22. To date, 22 out of 27 EU member countries have introduced private copying exceptions and corresponding levy schemes on copying devices. French performers in particular receive respectable payments (around€200pa for a regional orchestral player) from their country’s audio and audio visual levies. 23. The MU feels strongly that UK composers and performers should be allowed access to the same income stream as their European counterparts, particularly since the European Commission has recently been putting a lot of effort into attempting to harmonise the methodology used to impose these schemes and is about to appoint a high level independent mediator whose task will ultimately be to help arrive at an acceptable pan- European stakeholder agreement. 24. The Government’s response suggests that it opposes a levy system on the basis that “it is likely to have adverse impacts on growth and inconsistent with its wider policy on tax”. In its desire to provide an environment of simplicity and speed for the clearance of Intellectual Property rights for technological innovators in this country, however, the Government should also bear in mind that, while such innovators are applauded for their ability to receive remuneration through a network of licensing systems and micro payments, it is not always appreciated that performers and composers are very much in the same boat. 25. Even those at the top of the profession are now increasingly dependent on micro payments from collective licensing agreements and this is likely to increase in the future. A few hundred extra pounds generated under a fair compensation scheme for format shifting would be of real signiﬁcance to an individual musician in that context. 26. It is not just in comparison to Europe that the UK risks being seen as behind the times—we are now seeing developing countries introducing fair compensation schemes. The device manufacturers are already paying for patents to software developers and the like on each device sold and yet the act of copying onto these devices the “software” the consumer is most concerned with (music) is not currently generating any income for the music industry. 27. The MU has no issue with private copying, as long as it doesn’t put UK artists and composers at a disadvantage to the rest of Europe. Consumers should be free to transfer CDs that they have bought onto their mp3 devices. The MU would therefore support a new exception to copyright law as long as it complies with EU legislation. 28. We would therefore like the Government to recognise the principle of fair compensation as laid out in EU Directive 2001–29. As already stated, almost all EU countries operate a form of private copy levy system. 29. If a private copying exception were to be introduced in the UK without accompanying fair compensation, it would leave UK artists and creators worse off than their counterparts in 22 other EU countries.

Digital Economy Act 30. The MU fully supported the Digital Economy Bill and the subsequent Digital Economy Act. The creative industries lose around 20% of their revenues every year because of piracy, and this has a knock-on effect on the future work opportunities available to our members. 31. Without strong and effective measures to tackle illegal ﬁle-sharing, it will be impossible for performers and creators to continue to provide the content that will drive the digital economy. 32. A report by TERA Consultants, published in 2010, predicts that by 2015, losses due to piracy across the EU could reach as much as 1.2m jobs and€240 billion in retail revenue. The report explores the impact of piracy in the EU’s ﬁve biggest markets (Germany, UK, France, Italy and Spain) and has found that the UK’s cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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creative industries experienced retail revenue losses of €1.41 billion and losses of 39,000 jobs due to piracy in 2008. The Europe-wide figures total nearly€10 billion in revenue (€9.881 billion) and 186,400 jobs. 33. The sectors most impacted by continuing piracy activity are expected to be film, TV series, recorded music and software (based on current piracy trends and assuming no significant policy changes). Losses in the UK alone could be up to 254,000 jobs and€7.8 billion in retail revenue if measures, such as those outlined in the Digital Economy Act are not fully implemented. 34. We believe that the framework set out in the Digital Economy Act provides the right balance between supporting creative work online and the rights of subscribers and Internet Service Providers (ISPs). 35. The notification process set out is fair and proportionate, and we believe that the graduated response, particularly the first stage letters, could be a very effective tool to educate the general public about the importance of copyright to musicians and other creators and also a useful means of whittling down the total number of illegal file-sharers. 36. The MU looks forward to the implementation of the Digital Economy Act as soon as possible.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget — The MU has been advised by Her Majesty’s Revenue & Customs’ (“HMRC”) that, based on an Upper Tier Tribunal appeal hearing in the case of ITV Services Ltd v HMRC, they now consider self- employed musicians fall within the regulations for Class 1 National Insurance (“NI”) contributions. — Previously, HMRC’s Guidelines On The Special NIC Rules For Entertainers (issued in April 2005) provided a specific exemption for session musicians. HMRC are currently reviewing these guidelines in light of the Tribunal decision. — This decision widened the scope of the Social Security (Categorisation of Earners) Regulations, and could mean that musicians are now caught within these regulations, depending on the terms of their contract of engagement. — Where performing musicians’ fees are computed by reference to time (eg for a recording session or live gig) this may now mean the employer has to deduct from the fee and pay HMRC 12% Class 1 NI (the employees contribution). Additionally, the employer may also be liable to pay the 13.8% employers NI contribution. — This is potentially a huge problem both for our members and for the employers in the music industry, and could lead to the closure of up to 13 orchestras. In addition, many overseas producers bringing lucrative inward investment into the UK’s creative economy by way of recording soundtracks for films may take this work elsewhere as a result of having to pay employers’ NI. — The MU believes that self-employed musicians (self-employed for tax purposes) and those who engage them should not be subject to employees’/employers’ Class 1 National Insurance deductions. — Complete compliance with this ruling is completely unworkable and would, for example, require a pub landlord to deduct National Insurance and to know whether to pay an employer’s contribution. This would wipe away any progress made by the Live Music Act to encourage live music in small venues. — In addition, there are few or no earnings related contributory benefits available to the musicians paying the Class 1 National Insurance payments due to the way in which they work. — We would welcome the chance to give further detail of this to the committee and start a dialogue with the government and HMRC about how this situation can be resolved so that it doesn’t destroy much of the creative economy.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this 37. A good music education system is essential to ensure the development of a new generation of musicians. 38. For music education to be the best it can be, it has to be a statutory responsibility with long term Government funding. Music must remain integral to the national educational strategy and remain part of the national curriculum. If not, each individual head teacher is free to make it more or less of a priority. 39. There needs to be a combination of classroom and instrumental tuition delivered by peripatetic music teachers with professional musicians and the music industry in and out of the classroom. Music education needs to be funded so it is inclusive, with progression routes built in at all levels and a well trained and rewarded workforce. 40. Following recommendations in Darren Henley’s review of music education in England (the “Importance of Music”), Arts Council England has awarded funding to 122 Music Hubs. In most cases the Hubs are led by existing Local Authority music services. However, many local authorities are reducing their contributions to the new Hubs and this, combined with a signiﬁcant reduction in central government funding is inevitably leading to cuts in specialist music education. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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41. The MU is working closely with the Hubs to ensure that music instrumental teachers and music education in general does not suffer during this transition period. It is also calling for every Hub Advisory Board to include an instrumental teacher. 42. It is of great concern that many Hubs are now revising terms and conditions which will mean that, in many cases, instrumental teachers who were previously employed will be forced to become self-employed and will consequently suffer a reduced income as well as a total lack of employment protection. 43. We agree with the principle of the National Plan that all children and young people should have access to high quality music education. For this to be achieved music instrument tuition must be delivered by a skilled and well resourced workforce. 44. The MU would therefore like the Government to ensure that terms and conditions are standardised across the Music Hubs so that instrumental music teachers are fairly treated during this time of transition.

Conclusion 45. The MU would welcome the opportunity to give further evidence to the Committee, as we have numerous examples relating to the Olympics and the potentially damaging effect of HMRC regulations on self-employed musicians, as well as information on the effect of the Hargreaves recommendations. October 2012

Written evidence submitted by the Association of Authors’ Agents The Association of Authors’ Agents (AAA) is a voluntary trade organisation whose membership comprises 102 British literary agencies. Our members, between them, represent the vast majority of authors writing for the general trade market in the UK. Authors represented by our members enjoy an exceptionally high proﬁle around the world. Revenues from the sale of rights in their works comprise a signiﬁcant portion of the UK creative economy. The AAA’s members are devoted to promoting authors’ works in the domestic and global markets and to defending authors’ rights in the UK, abroad and online.

Introduction The AAA notes with dismay that publishing is not a sector mentioned as being worthy of special focus in the Committee’s inquiry. Publishing is the largest sector in the UK’s creative economy and deploys immense commercial and cultural inﬂuence around the world. British writers are at the heart of this sector and the AAA believes that authors’ concerns and rights should be prioritised by Government in order to safeguard their essential contribution to the creative economy.

Summary — The AAA has signiﬁcant concerns regarding the introduction of Extended Collective Licensing and provisions for the exploitation of Orphan Works and the likely impact of these provisions on primary licensing markets. — The AAA opposes the features of the Enterprise and Regulatory Reform Bill which will allow changes to be made to Copyright law via secondary legislation. — The AAA opposes the Government’s proposal to move the administration of the Public Lending Right away from the existing Registrar. — The AAA urgently seeks DCMS’s assurance that authors will receive their statutory equitable compensation on book loans made via the volunteer library sector.

Further Comments 1. The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth and the Government’s response to it; the impact of proposals to change copyright law without recourse to primary legislation 1.1 The Government’s implementation of the recommendations of the Hargreaves Review includes provisions to introduce Extended Collective Licensing and to allow the exploitation of Orphan Works. Should ECL be introduced we urge that the IPO demonstrates real understanding of and consideration the myriad forms of licences which are carefully granted by rights owners in the publishing sector. Primary licensing deals made by literary agencies and publishers maximise both profit and creativity and take place within the context of a thriving marketplace both domestic and international. Many primary licences (for example, the grant of audio rights or the grant of TV/film adaptation rights in a literary work) reserve specific secondary rights to the licensee and there is a significant risk that an ECL may unwittingly infringe the terms of the primary licence. The primary licence—almost certainly of much greater commercial value to all parties involved— would thus be utterly compromised. ECL also contravenes one of the fundamental principles of the Berne Convention which is that anyone seeking to use Copyright material must first seek the permission of the owner. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The opt-out scheme proposed by the IPO (whereby rights holders must come forward to say that they do not wish their work to be licensed via an ECL) is very troubling to the AAA whose members’ primary purpose is to represent the interests of client authors and manage their portfolio of rights. There is a disturbing echo here of the Google Book Search Settlement proposed in the USA in 2008 and subsequently rejected by the American court before which it was brought: that Settlement was widely criticised by authors around the world and is now discredited as a model for mass licensing. In his ruling, Judge Chin identified its most problematic feature as the obligation on rights holders to “opt out” of the settlement if they did not wish their work to be used by Google. 1.2 The AAA is very concerned to see that the Enterprise & Regulatory Reform Bill includes provisions for the Government to introduce changes to Copyright law via Secondary Legislation. The wording of Clause 57 as it stands allows, for example, for ECL/Orphan Works schemes to be introduced, and for further exceptions to Copyright to be made, via Statutory Instrument. Significant elements of the publishing sector and authors’ ability to control and to freely exploit their intellectual property could be threatened as a result of these proposed changes to the Copyright, Designs and Patents Act 1988. We urge the Committee to adopt our view that primary legislation is the best and most transparent vehicle for complex policy-making of this kind. We firmly believe that the wide-ranging powers to adjust Copyright law via secondary legislation proposed under Clause 57 of the Enterprise & Regulatory Reform Bill should not be given to Government. 1.3 In respect of the on-going discussion about how ECL schemes would work: we wish to underline the importance of the inclusion of a very robust requirement for diligent search should a body seek an ECL that would include the right to make use of Orphan Works. The designation ‘Orphan Work’ is always applied by a party wishing to make use of the work in question in their own interest and unless the diligent search requirements are truly testing and thorough there will be an incentive for the party seeking the ECL to maintain the work’s status as Orphan. This has been neatly termed by the IPO as a ‘perverse incentive to ‘Orphan’ works’. It is essential that any mass-licensing regime to include Orphan works must strongly incentivise all parties toward discovery of the right(s) holder(s) in any works deemed to be Orphan, such that the body of works classified as Orphan is continuously and energetically reduced in size. There may well be rights holders in existence who are not readily apparent, or a chain of title for an undiscovered and unpublished work which could, if handled in a careful way, reap maximum creative and financial rewards via the very efficient existing commercial mechanisms already in place in the publishing sector.

2. The Public Lending Right 2.1 We continue to be bafﬂed by the Government’s desire to move the administration of the Public Lending Right away from an already established, highly professional, efﬁcient and fully competent body. We strongly reject the Government’s view that the British Library would be a suitable organisation to take on this responsibility in place of the existing Registrar. 2.2 We urge that the DCMS immediately clarify precisely how authors’ legal right to equitable compensation for library loans via the PLR will be guaranteed within the expanding volunteer-run community library sector. October 2012

Written evidence submitted by Ivor Hall This is a personal submission by Mr Ivor Hall RIBA, AA Dipl, FCSD. Retired Architect, Interior and Exhibition Designer. My submission is to draw attention to the Committee of what I consider a failure of both our Private and more particularly our Public Bodies failure to attract the best design for our national monuments. I concentrate on the 21 Century. I comment on 9 21C National Memorials, in date order that have been constructed in London, in the main in our Royal Parks. What I have seen in the design of most of these Memorials is that as a sole practitioner/ designer I never had a chance to submit a competition design although I did submit a statement of design for the Queen Mothers Memorial. I also, unofﬁcially, sent in, at the time of the competitions designs for both the Diana Fountain and the 7/7 Memorials. 1. 2002—Commonwealth Gates. Is a memorial in Green Park funded by the National lottery costing £2.8 million. Comment—Oh dear, NO GATES! 2. 2004—Diana Fountain Memorial in Hyde Park, Government funded by Gordon Brown with a budget of £2 million + £I million for maintenance ﬁnally costing over £5 million. A design selected by an appointed committee of the great and the good which ignored both the competition site and budget they had so carefully selected. The design eventually was enclosed by a 365M long steel fence and, when open, permanently manned by security staff for health and safety reasons!. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Comment—Costly, shambolic and a complete disaster. See attached my article published in 2008 in the magazine Altwatch.2 3. 2004—Animals at War in Hyde Park conceived by Jilly Cooper and funded by private donations costing £I.4M. Comment—A well designed memorial carrying a clear message 4. 2005—National Police Memorial in St James’s Park conceived by Michael Winner and funded by public subscription costing £I.75 million. Comment = Not very practical or value for money. 5. 2005—Women at War in Whitehall, Government funded costing £1.7 million. Comment—Solid and unimaginative 6. 2005—Battle of Britain on the Embankment Government funded costing £1.75 million. Comment—A good design but costly. 7 .2009—Queen Mother Memorial on The Mall in St James’s Park Government funded costing £2 million. The original selected design had George VI and the Queen Mother on the SAME plinth—an idea I also had put forward. I am advised the step change to put the QM below GVI came from the palace, a change which leaves the most awkward relationship between the QM in an overbearing Garter hat being sited some 4M below a bare headed GVl. Comment—A great shame the original concept was not followed as the relationship of the two together would have been so much more comfortable on a plinth on the level of The Mall. 8.2009—7/7 Memorial in Hyde Park government funded costing £IM. A memorial designed by committee which lacks two essentials: (a) I am, time and time again, told by the DCMS and the RPA that this is a memorial only for the 52 who died on that day. It is not in memory of the nearly 700 who were wounded in the four incidents. Neither does it give thanks for the brilliant and heroic work of London Transport staff, of fire-fighters, of ambulance crews, of police, of Doctors and hospital staff and members of the public who all worked under hellish conditions to save the lives of many. (b) As you see the memorial from the nearby path there is no tablet to tell you of the horror of the day, of the 52 deaths and nearly 700 wounded and all the public service personnel who worked so hard to help and succour. It is easy to dismiss it as another bit of modern sculpture. I have kept on suggesting the need for such a tablet to the DCMS and the RPA but they have dismissed it out of hand. Perhaps your committee can help them to change their minds. Comment—An incomplete memorial which fails to tell the story of the horror of that day and is solely dedicated to the 52 who died. 9. 2012—Bomber Command Memorial in Green Park funded by public donations and costing some £7 million against an original £2.5 million with a further £600,000 from the Government to cover the cost of the opening ceremony and a further £1.5 million for ongoing maintenance. A moratorium on memorials on London’s Royal Parks was over ridden by the then minister and a sub- committee of the City of Westminster Planning Department overrode their own officers who recommended the design be refused and in its place a more modest memorial more in keeping with this small park. Comment—Many of us who agreed with the planning officer’s recommendation was ignored by the BCA who ran this project and their designer Liam O’Connor. To accommodate this insensitively designed memorial and its unnecessary add ons of a colonnade and surrounding structure mature trees were felled. Its sheer overbearing scale has destroyed Green Park forever. CONCLUSION—I believe one would get the best results if future memorials in public places were subject to open design competitions. The competition rules should not be run by inexperienced in-house departments but by outside agencies like the RIBA who know how to write and ensure that the rules are fair and are followed to the letter. I have, in my career produced little real architecture as my interest has been on wider matters in the field of design. This was first evident when, as a student I worked in an Architects office on the Festival of Britain. I later concentrated my practice on major refurbishment work of offices, shops and restaurants and the design of exhibition stands in International Trade shows around the world. Other work included the Live Aid Concert 2 Not printed. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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at Wembley, 2000 Sun dial designs for the Dome and private gardens, Designs for the Diana Fountain and 7/ 7 memorials, company logos and this year a proposal for a Museum for Nature in China. November 2012

Written evidence submitted by International Broadcasting Trust Summary — This submission is made on behalf of The International Broadcasting Trust (IBT). IBT welcomes the Committee’s inquiry into support for the creative economy and the opportunity to submit written evidence. — IBT is an educational and media charity which works to promote high quality broadcast and online content for a British audience about the world outside the UK, especially the developing world. Our expertise lies in such content and therefore we will limit our response to this inquiry to the TV sector, although issues we raise may be relevant to other sectors of the creative industry. — IBT welcomes this inquiry because it is IBT’s view that the broadcasting, television and radio production sectors need support to ensure the production of public service content where there is market failure. We view market failure as a situation in which there is a lack of supply of a genre or type of programming or there is a lack of plurality of supply of a genre on free to air platforms. This most often occurs when the BBC is the only provider of a certain genre or type of programming. — IBT is keen to stress that the value of the broadcasting and production sectors lies not just in the economic contribution they make to the UK but also in the contribution they make to British life, education, society and culture through public service broadcasting. — Television viewing is increasing and is one of the UK’s most popular leisure past-times. There is an opportunity for television to continue to provide informative, entertaining and educative content but without policy which supports high quality public service broadcasting, it is likely that quality, diversity and range of content will diminish and certain genres of programming will disappear from our screens because they are considered less commercially viable. — IBT believes that the upcoming Communications Act is an opportunity for the Government to ensure support for UK originated public service content rather than simply UK-originated content which appears to be the focus of this inquiry and the Government’s Communications Review. If content supported by policy is public service content this change will bring a greater beneﬁt to the public. It will be a missed opportunity if the government legislates for this to be simply UK-originated content rather than UK-originated public service content. — IBT is most concerned about the drop of content on television which tells us about the world outside the UK. There has been a 41% decline in the amount of non-news international programming since 2005 on the PSB terrestrial channels. This decline is worrying when set against the increased impacts of globalisation on our lives and economy. IBT would like to see policy which supports the provision of international programming on mainstream channels to ensure that the UK public has access to engaging content about what is going on in the wider world. — There has been a drop of 20% in investment of UK originated public service programming on the BBC, ITV, Channel 4 and Channel 5 in the past 5 years. IBT believes the Government should implement policy which incentivises investment in such public service content on the mainstream channels. — There are other income sources which the Government should consider including levies, the abolition of retransmission fees and further tax breaks. This funding could be put into programme making and help the broadcast industries ﬂourish.

Evidence 1. Success of the Broadcasting sector: Despite the fact that the UK broadcasting and production sectors generate billions every year and employ thousands of people, IBT is concerned to stress that the success of Britain’s cultural sector cannot be judged simply in economic terms. 2. Social and Cultural Benefits of Broadcasting: A diverse and thriving UK content production industry is profoundly important because it makes a contribution to Britain’s sense of identity, to British citizens’ knowledge and information about the world around them, and to the richness of British cultural life. It is IBT’s view that the social, cultural and educational benefits of UK-produced public service content (PSC) need to be considered equally as important as the economic benefits of such content when the Government is considering regulation and legislation. 3. Investment in PSC: Investment in UK-originated public service content has declined by 20% in the past five years and IBT believes that the Government needs to incentivise investment in public service content across all platforms especially in genres in which there is market failure. We have made suggestions of how to source funding for public service content and incentivise production later in this document. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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4. Genres of programming which are specialist, such as international content or children’s programming, need support because the market for them is limited and they are often less commercially viable internationally because they may be produced from a specifically UK perspective. These programmes are essential because they inform us from a uniquely UK perspective what is going on around us in the world. This means that such programming is specifically relevant to us and therefore it may sell less well internationally. 5. Because of the economic and social benefits derived from public service broadcasting it is IBT’s view that investment in UK-originated public service content should be supported through legislation. 6. Commercial PSB’s: It is IBT’s view that it should remain a requirement of the commercial Public Service Broadcasters (ITV, Channel 4 and Channel 5) to fund guaranteed levels of original UK content in return for privileged positioning on the EPG and any other incentives the Government can devise to ensure their contribution continues. This contribution should include high quality programming and a diversity of suppliers to provide different approaches and perspectives. It is clear the public wants a plurality of suppliers of public service content.3 7. An element of this provision should be programming which informs us about the world around us. The single most important Purpose in the 2012 Ofcom PSB Annual Report was Informing our understanding of the world, with all three statements scoring higher than those for any other Purpose.4 8. IBT believes that the Government should ensure through policy that it is a commitment of any public service broadcaster to provide content which enables audiences to understand the wider world and engage with it. 9. It is clear from evidence5 that content which tells us about the wider world can lead to greater economic and social success. Such content provides citizens with the skills and knowledge they need to prosper and compete in a globalised society. The media and television, in particular, have a crucial contribution to make in engaging us with accessible content which tells us about other cultures and places so we can build a well- informed society, with the skills and knowledge to do business effectively with other countries, with a population which is able and willing to travel widely and appreciate other cultures. 10. There is specific evidence that awareness of the wider world leads to greater social cohesion,6 greater employability,7 and that the public have an appetite for such information.8 11. Despite the rapid pace of globalisation which has impacted on all our lives, IBT’s most recent quantitative research (Outside the Box, 2011)9 shows a huge decline in the amount of programming about the wider world on UK television in recent years. 12. There has been a 50% decline in the amount of non-news programming about the developing world on the public service broadcasters’ terrestrial channels since 1989 and a 41% decline in international programming on the same channels since 2005.10 13. This decline in international content which is free to access and designed for mass audiences is deeply worrying when set against the increased impacts of globalisation on our lives and economy. Increased international travel, migration, the development of the internet and other global interconnections have increased our interdependency on the wider world, yet we have less content on television which can provide us with a context for news information. 14. News bulletins generally present events in the wider world only when they are newsworthy and this often means that they are negative. This perpetuates images of disasters abroad and provides little context for events. It is not possible to provide more than the basic, headline facts in a news story and this means we have little understanding of the deeper issues involved in events in other countries. It is IBT’s view that broadcasters should have a commitment to provide this contextual information in other programming on their mainstream channels. 15. IBT’s Outside the Box report warns that if current trends continue on mainstream television, instead of broadening understanding, television is likely to limit people’s horizons. It is doing this by moving programmes about international affairs onto niche channels which attract far fewer viewers and smaller budgets. The number 3 24 9 out of 10 people do not want the BBC to be the only provider of public service content in the future (Ofcom’s Second Public Service Broadcasting Review, Phase 2) 4 Ofcom PSB Report 2012 5 IBT can provide a longer briefing note on evidence that information about the wider world has beneficial effects on society if required. 6 Impact of Global learning on public attitudes and behaviours towards international development and sustainability. Think Global (2010). Learning about global issues counteracts a widespread sense of discomfort about racial and religious difference. 7 British Businesses fear the UK will be left behind economically. The Global Skills Gap: preparing young people for the new global economy (Think Global and the British Council, 2011) Three out of four business leaders fear that the UK will be left behind by emerging countries unless young people learn to think more globally. 8 There is a considerable appetite for greater understanding of international affairs. Understanding Public Attitudes to Aid and Development—ODI/IPPR (June 2012).These workshops showed a clear appetite amongst the public for a richer understanding of how aid is used and how development takes place. Participants expressed frustration with their own lack of knowledge and questioned simplistic notions of how aid can achieve results. 9 IBT, Outside the Box June 2011 10 Ofcom, PSB Report 2010 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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of countries covered over the past ﬁve years by the public service broadcasters has remained static as has the choice of countries covered (52% of countries were not the main subject of any programme in 201011). We see the same countries on our screens year in and year out without change. This is a trend which concerns IBT because it is potentially leading to a narrowing of our horizons and a limited understanding of the world around us. 16. It is IBT’s view that these trends in international content provision will lead to increased insularity and isolationism in the UK at a time when, as global citizens, we need to engage with the rest of the world. This potential for the UK public to become more insular could be guarded against if the public service broadcasters were required by law to broadcast programming about the wider world as one of their commitments, as the BBC is required to do through its global purpose to Bring the UK to the world and the world to the UK. We have urged the Government to consider this option to strengthen the provision of UK produced content which will add to the Nation’s understanding of the wider world.

Sources of Income for PSC and Incentives for Investment 17. Retransmission Fees: IBT urges the Government to use the upcoming Communications Act as an opportunity to ensure that carriage fees for the Public Service Broadcasters on cable and satellite platforms are abolished in return for guaranteed investment in UK originated public service content (as opposed to simply UK-originated content). If the content supported is public service content, rather than simply UK-originated content, this change will bring a benefit to the public. It will be a missed opportunity if the government legislates for this to be simply UK-originated content rather than UK-originated public service content. 18. In order to ensure that such legislation results in an overall increase in investment in UK content, the amount of financial benefit to each broadcaster will need to be assessed, transparency will be required by the broadcasters and Ofcom will need to be given additional powers to ensure that this extra funding is used to produce public service content. 19. We base our argument for abolishing carriage fees for public service broadcasters on the clear evidence of the benefits to cable and satellite operators of transmitting the five PSB channels. Viewing to these channels in cab-sat homes comprises 2/3 of all viewing if you include the PSB portfolio channels and makes them more attractive to consumers. 20. Additionally, other countries have acknowledged the importance of retransmission fees as a means of returning value to those channels which have invested in original local content, and the UK should follow suit. 21. On principle, IBT opposes any funding generated by the licence fee being paid to a private company for retransmission purposes. 22. EPG Positioning: There is clear evidence that the public expects to have easy access to the five public service broadcasters and IBT strongly opposes any move which would reduce their prominence on the EPG. 23. Additionally, IBT welcomes the suggestion that EPG positioning could be used as a lever to encourage greater investment in UK-originated content but we urge that this policy should be used to encourage not just UK-originated content but UK-originated public service content otherwise there is little quantifiable benefit for the public. 24. IBT acknowledges that any legislation which implements changes to the rules for the EPG need to ensure certainty for broadcasters without which they will not be able to operate effectively. 25. Tax Breaks: IBT welcomes the proposal for tax breaks for drama and high-end TV production and animation. We believe there are other genres which the Government should consider applicable for tax breaks. These are the areas where there is market failure such as children’s and factual programming which according to Ofcom are the genres most at risk. If tax breaks were available for such programming it would provide greater incentive for investment in these areas. 26. Levies: A number of levy options have been suggested in the past, which follow the example of virtually every other European country and are based on the logical principle that those enterprises which exploit value from UK content creation should make some return to the creative pot. These include reuse fees, fees levied on ISP’s and mobile phone operators, and search engine fees. 27. The revenue thus created would help to reduce the funding deficit for public service content and could be used to provide free-to-air high quality competition to the BBC. Unlike pay-TV, this content would be free at the point of consumption, a fundamental public service principle of UK broadcasting. All new levies will have benefits and disadvantages, but none have been the subject of systematic, independent investigation. Ofcom should be asked to make such an assessment as part of the new Communications Act process. 28. Sale of Spectrum: From 2014, it is proposed that broadcasters will be charged for their use of spectrum through a new system of administered incentive pricing (AIP). This funding will go to the Treasury and will represent a further reduction in revenue available for reinvestment in original content. This funding could be 11 IBT, Outside the Box June 2011 p 12 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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diverted into public service broadcasting content and we propose that the Government should investigate this option. November 2012

Written evidence submitted by Onedigital FROM: ONEDIGITAL—REPRESENTING BRISTOL MEDIA, MANCHESTER DIGITAL, WIRED SUSSEX, D-MEDIA Executive Summary — The UK has a recognized excellence in creative industries from film & TV to events to advertising. It is built on a foundation of small companies which may become key elements of major multi- national corporations. — Alongside the national work to enable easier lending, tax relief, and skills development, maintaining the health of the SME sector is crucial, and clusters are central to this. Onedigital represents four of the nine UK creative centres identified by NESTA—Bristol, Bath (through close collaboration in the West of England LEP), Manchester and Brighton. These centres have a strong foundation for growth, innovation and collaboration. — These are in-industry, locally-focussed membership organizations that have grown to financial independence. Members pay from their profits for the entities to exist on their behalf. — Their brokerage role is required for connection between micro-business and public sector support, and they function with very low capacity. — The best use of public sector funding would be to underwrite and support cluster-based activity. Public agencies such as Creative England and Creative Skillset have a role in promoting the industry and with funding directed through cluster organizations, a supply chain would be created to industry via the most effective delivery partners. — Onedigital is actively engaged with the developing cluster for Birmingham, and has the capability to develop a national network of world-leading quality. — New ways of wealth creation require innovation and collaboration—best delivered in a geographical centre with a rich ecology, common purpose and founded on trust.

1. Barriers To Growth 1.1 Creative companies The Creative Industries sector is dominated by small businesses (generally <30 staff, predominantly <10 staff) with a high level of passion and commitment from the founding partners. These are bought up by larger companies, but generally maintain their staff base as the core of their value. There are opportunities for both “Start-up” and “Step up” growth, which will require support. Companies are personal, and wary of the constraints of external private equity funding or bank debt. Creating more jobs means creating more companies—but it should be noted that employee numbers are less important than talent & experience, and profit is a better measure than turnover. They will have a low level of FTE staff, so measures of growth must be appropriate—it’s advantageous and perfectly possible to run a creative company with increased profit but lower staffing and lower turnover.

1.2 Creative production The sector creates both products and services—so a significant proportion of the industry is dependent on the health of rest of economy, which will be reflected in expansion and contraction noted by DCMS in the briefing document. Some activity could be classified as manufacturing—the generating of new assets that turn a £10 tape into a £100,000 tape—whilst other activity promotes economic activity through PR, information & advertising. Digital technology has driven convergence of these communication activities, creating Full-service agencies, and multiplatform TV companies. Production activity creates new media assets, which are edited into products. Production ratios may be over 100:1, so the final delivered asset is accompanied by 100 more master assets. The exploitation of these assets is the key to growth in production, and is enabled by digital technology in production and delivery. Income is often not generated at the point of delivery, but over a longer licensing period, which can be years rather than months. The changing rules over IP must make the release of assets easier, enable international co-production and culturally-based delivery, and multiplatform production. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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1.3 Areas for growth The UK has world-class talent, built on a ﬁrm foundation, and the role of government is to enable the growth through the provision of effective infrastructure, the underwriting of company start-up and step-up. These developments can only be effectively delivered with a deep understanding of the nature of the companies, in speciﬁc areas of the UK. For example, the Bristol/Bath area has three world-class strengths in animation, factual and publishing, but a very limited video game industry.

1.4 The value of networks in the digital world The NESTA report on microelectronics Chips with everything shows the value of industry networks, and the need to support them. This is directly applicable to creative businesses. For example, Bristol Media is itself a Creative Industry company, brokering and aggregating on behalf of the SME community. It is essential to recognize that development implies collaboration and that this has a direct cost. The four key areas for development and sector growth are in greater: — Experience—with designed interfaces, linked journeys. — Immersion—whether 3D, HD, cinematic or physical and emotional. — Availability—via mobile devices, location-speciﬁc. — Economy—in new forms of workﬂow and distribution.

2. Overcoming Barriers to Growth Creative companies are microbusinesses, so overhead rates—cost of infrastructure, cost of digital connectivity, rates and rents—are crucial to the health of the industry. Bristol Media’s Barometer 2012 survey identified: — A failure in the provision and ease of SME loans from banks. — The difficulty of effective engagement with Private Equity finance, given the non-linear and unpredictable growth models of creative activity. — Issues over the removal of public sector grant funding for match-funding, often with onerous reporting and slow repayment that seriously affects cashflow. — Poor digital connectivity—73% of the respondents to the Bristol Media survey said their needs were increasing, and that bandwidth was a key factor in locating offices, alongside low rent and access to talent. Creative Industries are recognized as a key sector within the West of England LEP, alongside Aerospace and Microelectronics, and represented at LEP Board level. This enables the flow of funding from central government to specific Centres of Excellence and direct to industry through membership organizations. Our recommendations are: — Make smarter development interventions—access to funding, local tax breaks, especially for start ups and companies “stepping up”. SME’s have capacity issues, and one year is a long time in Media. It’s only in Games, Feature films, and big documentaries (either big landmarks or formatted returning series) that contracts last a whole year. — Define the value of spillover to other industries, as noted by the NESTA Creative cluster report. This emphasizes the value of co-location with high-tech, and “Knowledge-intensive Business Services” (KIBS) including legal & financial services—(both Bristol strengths). — Ensure the government drive for broadband delivers effective, cluster-based provision alongside comprehensive coverage, and acknowledges the need for symmetrical delivery and low latency. The industry runs on a commission model, with time for ideas development segmented out from production. Growth requires: — Investment support, including the enabling of collaboration, support for start-ups, and for businesses facing a step-change in capacity. — Connections with commissioning structures in media, private sector & public sector. TV production retains a limited commissioning system in an asset-based world. Rights are often retained by commissioners with no plan or even potential to exploit them. So, there is a market failure in a model that creates a single product from a range of activities, rather than creating multiple, multiplatform products that driving the maximum return. There is a market opportunity in visual products that communicate effectively to all humans, regardless of language or culture, and can go beyond entertainment to cover universal areas including education & health. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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We have identiﬁed a range of growth models that recognize both incremental and disruptive innovation: — Stimulating the formation of more small companies. — Providing equity income through mentoring. — Forming Joint Ventures. — In-sector collaboration. — Out-of-sector collaboration (eg with a technology company). — Maintaining company size whilst increasing GVA. — Mergers and Acquisitions. — Private equity or debt funding. These will be developed as a pilot within the West of England LEP.

3. The Value of Clusters Creative people want to live and work in specifically attractive places—tied to quality of life. The NESTA report on Creative Clusters identified centres in cities with a human scale, intellectual and cultural value. The rise of digital production and delivery also creates greater value in the co-location of technology and creative activities. Collaboration requires working with people “not like me”—and here, location provides a common purpose. According to NESTA’s report “Chips with Everything”, co-located working has provided a stimulus to developing enterprises for over a century. As early as 1890, Alfred Marshall, the precursor to modern cluster exponents, identified three factors that make geographic clusters beneficial: — Sharing of inputs: allows firms to procure inputs at a lower price as part of a cluster than they can in isolation. — Labour market pooling: Flexibility and mobility of labour is a key characteristic, lowering recruiting costs for companies and allowing knowledge spillovers to be shared more actively. — Knowledge spillovers: Workers learn from each other; companies have ready access to the latest ideas and innovations; close proximity to customers and suppliers makes it easier to understand customer needs and trends. This is combined with the ability to act flexibly and rapidly in response to this knowledge; being part of a cluster confers some of the scale benefits of a large vertically-integrated company, without the disadvantages of being slow to act. This effect is amplified by the open culture of the internet, and changes in opportunities for effective, creative work. A study by Emergent Research presented at the 2011 CoWorking Europe Conference identified that: “The rise of the independent workforce is structural (at least, within the western world). Even more striking, the majority of the independent workers and entrepreneurs choose to become independent. They will need locations to meet, work and network.” It is central to the connection between corporates and entrepreneurs. “The technology is getting every day more complex. Innovation cycles shorten. Big companies are always more risk averse. Most of them can’t dance in a time of agility. Innovation is already coming from the outside, especially from startups and creative individuals. Co-working spaces can both play a role as trend-watchers and serve as a bridge between innovators and big organisations.”

4. Developing the Talent Base Creative companies are learning organizations—developing concepts, creating prototypes and sharing knowledge on a daily basis. They will identify the need for external training when glass ceilings are hit, and at that point should be able to draw on support from public bodies including the Sector Skills Councils. The role of Universities in supplying suitable graduates in a wide range of ﬁelds is central, and the development of industry assessment of courses as part of the awarding of the “Skillset Tick” is welcome. It is also vital that the future workforce has greater diversity, and creates opportunities for talented “digital natives” outside FE & HE. This will require the brokerage, evaluation and delivery of effective, designed work experience, internship and apprenticeship programmes, which requires a closer working relationship with cluster groups such as the onedigital members. It should also be recognized that media practice is used as a means to provide stimulating activity for young people with low prospects of a working life in the industry, and although opportunities in digital communications are expanding, there is still an over-supply (in numerical rather than quality terms) of aspiring young people. It is good to note that the current BFI Talent Campus project deﬁnes participants as “Committed and Talented”, rather than simply disadvantaged. This will enable the clear support of talent from challenging backgrounds. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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As with the creative industries, there are key locations for University and FE provision of the talent base that will sustain future growth, and a need for greater collaboration—founded on trust, talent and a common purpose. In September 2010 the Council for Industry & Higher Education (CIHE) published “The Fuse” and launched the concept of CDIT—Creative, Digital and Information Technology—linking the development of technology with the development of content. The report says: The UK has an historic opportunity to be a global leader in CDIT. There is serious competition and many barriers to success in policy, behaviour and funding. So we must act now, or risk being left behind in the digital explosion. It has two key recommendations: Universities and Funding Bodies — The Funding Councils should give the same priority to technology-heavy CDIT programmes as they do to STEM projects. — Universities must embrace—and be rewarded for—the interdisciplinarity that is fundamental to the development of successful CDIT products, services, practices and content. — Universities must open themselves to more and better ways of working with graduate-rich small and medium-sized CDIT businesses. Business — CDIT businesses must contribute systematically to the development of courses for the graduates they hire by working with universities to ensure a broad range of business “touch points” for students. — Business-HE collaboration should be at the heart of the new Local Enterprise Partnerships. — Major CDIT businesses should build on best practice and work jointly with universities to help develop graduate rich SMEs. It is apparent that these growth aims are entirely dependent on strong links between localised business and learning centres. Quite simple, colleges ﬁnd it hard to deliver an employable workforce without existing in a varied creative economy. The research work is continuing at Sussex University, and includes input from Wired Sussex. In December 2010, Universities UK published “Creating Prosperity—the role of Higher Education in driving the UK’s Creative Economy”. Once again, it notes the importance of the creative economy around a university—the role of the cluster. Closer working can create growth of the UK creative economy through: — research that supports innovation in the creative economy; — new models for interacting with creative businesses; — acting as hubs for innovation at the heart of regional creative clusters; — the development of talent and high-level skills for the creative economy; — activities that enhance the employability and enterprise skills of students and graduates; and — provision of tailored and high-quality continuing professional development (CPD) to the creative industries.

5. New Ways of Working The Work Foundation report “Shaping Up for Innovation” published in September 2010 highlighted that: “Innovation requires getting value out of invention. This requires important inputs from the creative industries such as advertising and design as well as good management, organisational expertise and outstanding leadership”. It notes the value of business/educational collaboration, which will be geographically-based: “It might be sensible to leave it to universities to innovate and to present bids that boost the innovative potential of their students, particularly improving interdisciplinary working between STEM subjects and creative subjects”. The NESTA Creative Cluster report identiﬁed 9 areas outside London—Bath, Brighton, Bristol, Cambridge, Guildford, Edinburgh, Manchester, Oxford and Wycombe-Slough. The South West is highest scoring cluster outside the London hinterland (London + SE + East), and the report identiﬁed a greater diversity of approaches in the South than North—due to an historical “me-too” approach. The research analyses co-location between creative sectors and other innovative industries such as High- Tech Manufacturing and Knowledge Intensive Business Services (KIBS). cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Its case studies show how digitisation is driving innovation in the creative industries, with most ﬁrms investing heavily in internal research and development (R&D), and devoting large numbers of their staff to technology intensive activities in order to beneﬁt from this digital revolution. It recommends that policies should: — Catalyse latent clusters rather than try to build new ones from scratch. — Promote sectors that work well together. — Enable and encourage Universities to promote innovation in increasingly tech-intensive creative industries. — Help remove barriers to collaboration—NESTA’s Connect programme has found that an “airlock” model where a neutral organisation acts as a go-between can help build the trust needed to collaborate. (the key role of onedigital partners). — “Build bridges as well as towers”—creating virtual, place-based connections not require the building of new centres.

It is notable that the creative/digital community in Birmingham has contacted all the member organizations of the onedigital coalition in order to establish the best route for developing an effective cluster.

The NESTA report notes: “There is also clear evidence for the value of co-location in developing enterprising, agile businesses. Many of the mechanisms for the knowledge and network spillovers described above—such as commercial relationships and collaborations, and labour ﬂows across sectors—are more likely to take place between ﬁrms that are located close to each other.”

6. Taxation The Creative Industries Corporation Tax Relief proposal set a very high benchmark of £1 million per hour. It limits of tax breaks for drama, when many large scale documentaries are in a similar bracket.

The TV business increasingly relies on multipartner co-productions, with a mix of funding, resource and production talent provided by the partners. The Treasury deﬁnition of Co-production as requiring production by all partners may actually reduce quality, and complicate relationships and thus management overhead.

It should be for the companies to deﬁne the collaboration that creates the best product. It may be co- funding—with money from one partner, and craft skill from another—is the most effective, enabling a skills development in UK, even if money comes from, and returns to, a collaborating country.

7. Intellectual Property We welcome the work of the Hargreaves team, and note a fundamental requirement that any change to the IP Law further enables the move from “product based” to “asset-based” working, encouraging the originators of assets to develop wider markets for a range of products alongside the original commission.

8. The Value of Public Sector Support It is apparent that creative companies are small, highly-focused and highly talented “cells”, which exist in a wider, generally geographically-defined, ecology. Collaboration will be key to future growth, so the existence of cluster organizations provides a vital link between Central Government and micro-businesses. The aims of public funding should be to: — Underwrite activity to ensure it will happen, and engage small companies with minimal risk. — Ensure financial support is provided to the most effective delivery agents, closest to the demand. — Provide the right metrics for growth—eg net profit, not necessarily FTEs. — Drive infrastructure to provide what specific high-value experts need (eg 1Gb/s broadband). — Support the in-industry practitioners, and organizations that work in the commercial world. — We welcome the work of the Creative Industries Council, and believe it could be more porous to industry input from onedigital or it’s partner organizations around specific topics.

In summary, the Creative Industry sector has clear centres of activity—“clusters” which have grown organically by providing a high-quality environment and knowledge base. This provides a ﬁrm, trusting foundation for growth and innovation. Supporting these centres, underwriting development plans to drive collaboration, and providing tax breaks and discounted opportunities will be the best means to stimulate growth. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by Tate

I write to you further to your request for consultation on how best to support the Creative Economy.

In summary, Tate’s recommendation is that, for the Creative Economy to continue to ﬂourish, we must: — Mitigate damage being done by excluding the arts from the new English Baccalaureate. — Ensure that the arts are secured in the curriculum review.

Experience and conﬁdence in the arts give skills vital to the Creative Economy. They build the approaches required to understand and interpret the creativity of others, they provide the means through which people can ﬁnd expression and they inspire creativity anew.

In the request for consultation, you ask how we might avoid wasting the inspiration that the Opening and Closing Ceremonies of the Olympics and Paralympics gave. If the current trajectory of education policy is continued, we risk doing exactly that. The talents of the performers and creators who dazzled the world, and the very same creative industries that Danny Boyle’s ceremony so successfully celebrated, are both rooted in the opportunities provided through cultural learning, the chance to visit galleries, theatres and other institutions and the inspiration to create for oneself.

At the launch of Tate’s Annual Report in September, I called for the arts to be made a fourth ‘R’ in the curriculum, core to the opportunity that is provided for young people in the UK. I reiterate that call in the context of this consultation. The UK’s Creative future will be the poorer—and its part in the global creative economy weaker—if we do not take steps to secure the place of the arts in the curriculum now. By making art a part of the national curriculum, we give the next generation of artists, engineers, creators and cultural leaders—all the bedrock of the Creative Economy—the opportunity to develop the imagination and skills that are vital for our future.

The omission of the arts from the English Baccalaureate (Ebac) is at odds with any clarion call for the Creative Economy. Already, the threat of this omission has sent a signal to teachers and young people. In a survey in 2011, 43% of respondents conﬁrmed that as a direct result of the introduction of the Ebac, schools had put in place plans to restrict the degree of choice pupils are able to exercise over their Key Stage 4 subject options, and almost one in six of respondents reported that as a direct result of the introduction of the Ebac, teachers of non-Ebac subjects had been informed that they were at risk of redundancy. Furthermore, in September 2011 the number of places for secondary teacher trainees was cut by almost 14% overall: within that, Art PGCE places were cut by 40%. Such continued lack of valuation is entirely inconsistent with the value that the creative Economy represents.

In the interests of the Creative Economy and life more broadly, the arts require a stronger voice in the development of education policy and a more secure place in learning and the curriculum. The Cultural Learning Alliance and others have led the way in making representations to the Creative Industries Council especially in respect of the curriculum review, but their efforts must be supported by concerted action by government more widely.

In your questions, you rightly point to the importance of further and higher education in establishing a strong skills base to support the Creative Economy, but it is also the role of learning in general and it is this ecology that is imperilled by current policy. Further and Higher Education are the result of long-term development, and Tate joins with the Confederation of British Industry, and numerous other voices in emphasising the importance of recognising that.

Finally, the UK and Tate in particular are world leaders in providing cultural learning. Over the past year alone, Tate’s learning team has been consulted by organisations from many different countries and has proided ofﬁcial consultation to museums in Oman, Qatar and Singapore. Through turbinegeneration, the online resource developed by Tate, over 32,000 learners participate in a cultual learning network that spans over 40 countries. This reveals that cultural learning is an important export in its own right, with others recognising that they need to develop capacity for it, and that unless we place greater emphasis on cultural learning, the UK will fall behind as they do so.

In September, Tate joined with the Royal Shakespeare Company, the British Museum and the National Theatre to host the Worlds Together Conference in The Tanks at Tate Modern. It was booked out with 400 and delegates came from 25 countries The conference gathered some of the most inﬂuential thinkers in arts learning internationally to ask “What is at stake for children’s cultural lives today?” So successful was the conference that there are plans to recreate it in Brazil at the time of the Rio Olympics. As others follow the lead that the UK has taken, the UK itself risks throwing that lead away. November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by The Newspaper Society The Newspaper Society (NS) represents the UK’s regional media. Our members publish over 1,100 local and regional newspapers, paid-for and free, daily and weekly, circulating throughout the UK. In addition they offer 1,600 companion websites, hundreds of niche and ultra local publications and a range of digital and broadcast services, including several local radio stations. 42 million users visit their websites every month. The regional press industry’s investment in new platforms, converged multimedia newsrooms, video journalism, UGC, mobile sites, smartphone apps and other digital and print innovations means that local newspapers are now reaching more of the population than ever before as well as attracting new online advertising revenues. The industry is ﬁnding new ways to open up public bodies to scrutiny, for example via live webcams, Twitter, and blogging. Local media has increased its monthly online audience by 16% over the past year, with publishers citing increased access through smartphones and tablets.

1. Summary The NS submission concentrates on three issues, namely barriers to growth in the creative industries, VAT and proposals to amend UK copyright law. — Ownership regulation: the Government’s communications review and any new Communications Bill must facilitate local and regional media companies’ innovation and development; — Future of Press Regulation: the NS and regional and local newspaper publishers oppose any special press laws or state controls over the press; — Interaction of Government Departments: it is important that DCMS and BIS share intelligence on our sector and recognise its contribution to the UK economy; — Taxation: zero rate VAT on the printed word must be maintained; — Hargreaves Review: publishers must be able to rely on strong and effective protection of IP rights to ensure that they are properly rewarded for quality content, and to choose how they market their IP assets; — Digital Economy Act 2010: there must be doubt as to whether the DEA will prove effective against piracy, given the long delay in implementing the law; and — Enterprise & Regulatory Reform Bill: any changes to the copyright framework should be subject to full Parliamentary scrutiny; secondary legislation is not an appropriate vehicle.

2. Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector Ownership regulation 2.1 The development of local media companies is still constrained by the media ownership rules and their application by the competition authorities. It is important that the Government’s communications review and any new Communications Bill facilitate local and regional media companies’ innovation and development. 2.2 The industry welcomed the abolition of local cross-media ownership rules. The Committee will be aware of regional media companies’ case for further liberalisation of the media ownership rules, on newspaper company mergers and transfers of newspaper titles. Local and regional media companies should no longer be subject to special controls and should instead be able to compete fairly within the local media market, unfettered by the regulatory burdens which do not handicap their competitors. The media ownership rules and market definition, as interpreted and applied in practice, can still adversely impact upon the regional and local press, even where newspaper mergers and transfers would have helped to sustain titles. The industry has stressed the need for the competition authorities to recognise the realities of the modern local media market in their interpretation and application of the current rules, as well as improve their processes and procedures to reduce the inhibitions, crippling costs and delays occasioned by their investigations. 2.3 The industry was very disturbed by the OFT’s cautious decision to refer the anticipated acquisition by Kent Messenger Group (KMG) of several newspapers from Northcliffe Media Limited to the Competition Commission for further investigation on competition grounds. This led to the parties’ reluctance to proceed, not least due to the disproportionate costs of any reference, whatever the outcome, and to the subsequent closure of some titles. It has also had a chilling effect upon other regional media transactions, which might have prevented closure of local titles. 2.4 The NS welcomed Ofcom’s acknowledgment in its recent supplementary advice to the Secretary of State for Culture Media and Sport on Measuring Media Plurality that the existing regime to deal with competition issues raised by local media mergers is widely perceived to be too onerous. Ofcom believes it is important that this concern is not exacerbated by the plurality framework and has recommended that the public interest grounds associated with mergers should be modified so that they did not impact upon local and regional media mergers: cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w24 Culture, Media and Sport Committee: Evidence

“For local areas (below the level of a nation), we believe the issues facing local media are more about sustainability than plurality. In our June report, we said there was a tension between plurality and commercial sustainability that was exacerbated at smaller geographic units. The same may be true of the English regions. In this context, we would not recommend that a periodic review of plurality considered local or regional media, except insofar as they contribute to plurality at the level either of the UK or of one or more of the devolved nations [para 2.25]. In making this recommendation we note that the existing regime to deal with the competition issues raised by local media mergers is widely perceived as being too onerous. This is not the place to address that concern, but we do believe it is important that it is not exacerbated by the plurality framework. We therefore recommend that the Government considers whether the public interest grounds associated with mergers should be modiﬁed so as to have the same focus as the periodic review; namely, on those mergers which might affect plurality at the level either of the UK or the devolved nations” [para 2.26].

Future of Press Regulation 2.5 The NS and regional and local newspaper publishers are ﬁrmly opposed to any special press laws or state controls over the press. The local and regional press opposes any unnecessary encroachment upon freedom of expression in general and press freedom in particular, whatever the medium of publication. Where regulation of content over and above the general law is necessary, the industry remains a ﬁrm supporter of voluntary industry self-regulation, for both advertising and editorial, rather than imposition of statutory regulation in any form or to any extent.

Interaction of Government Departments 2.6 The local and regional media industry’s interests with regard to editorial, ownership, competition, advertising, local government, environmental, taxation and business issues—in respect of both UK and EU Commission policy and prospective legislation—span numerous government departments. There are key areas of fundamental importance to the industry, such as intellectual property, where helpful interaction between the Department for Culture, Media and Sport and the Department for Business, Innovation and Skills is vital. Shared knowledge and understanding of the sector, of regional media companies’ plans for the industry’s future direction and development and their contribution to the local, regional and national economy, by both departments is very important.

3. The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend tax reliefs targeted at certain sectors in the 2012 Budget 3.1 The retention of zero rate VAT on the printed word, including newspapers, is very important. The NS and regional media companies trust that the UK Government will be robust at every stage of its negotiations with the EU Commission on the review of the EU VAT system to ensure that UK zero rates will be maintained.

4. The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament) Hargreaves Review of Intellectual Property and Growth 4.1 IP rights are erroneously characterised in some quarters as inhibitory, anti-competitive and “anti- consumer”. Sadly this negative approach found echoes in the Government’s Consultation on Copyright, which should have presented an objective and neutral policy assessment. In truth it is the existence of IP rights that incentivise the substantial investments that drive creativity and consumer choice. Publishers face an uphill task in developing paid content digital offerings in an environment where the belief persists among many that such content should be free. Advertising revenues alone are insufficient to sustain innovation and development in the newspaper sector. Publishers must be able to rely on strong and effective protection of IP rights to ensure that they are properly rewarded for quality content. 4.2 The NS does not favour any major changes or additions to the current copyright exceptions, and refutes the premise that increased economic growth will ensue from weakening copyright in this way. The existing copyright regime strikes largely the correct balance between the interests of rightsholders in the control and exploitation of their works on the one hand, and society’s interest in the free flow of information and the dissemination of knowledge on the other. We have particular reservations over the proposal to allow quotations and extracts to be taken from protected content for all purposes, or to add further categories of use such as “information”, “analysis”, “argument” or “comment”. We foresee that a broader exception for quotations would unfairly benefit search engines and content aggregators—organisations that rely on the reproduction of others’ content—because on this pretext they may be able to use material without paying for it. 4.3 Proposals to truncate licensing in such areas as photocopying in schools and private copying could harm the creative industries by depriving publishers and authors of revenues and avenues for growth. On the cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Culture, Media and Sport Committee: Evidence Ev w25

assumption that a substantial proportion of the demand for reproduction rights online is for small value licences (for example, for use on amateur blogs), publishers are already addressing the market via large scale and low cost licensing technologies. Considerable work has already been done on the conceptual and practical modelling of rights, including the metadata framework and the ODRL v2.0 data model, with various proﬁles including RightsML. Licensing is a one-click process, with the communication of permissions and terms taking place automatically. Other approaches, such as businesses which offer microlicensing and authentication services to content owners and licensees are also emerging. Rightsholders must have the ability to choose how they market their own IP assets.

Failure to implement the Digital Economy Act 2010

4.4 We understand that the anti-piracy measures enacted by the Act, such as letters to suspected illegal downloaders and potential disconnection, will not be enforced until 2014 at the earliest. The legal challenges instituted by the ISPs have largely failed, but they have celebrated the fact that they have effected this long delay in implementing the law. Four years is a very long time in the rapidly evolving world of digital content. By the time the process of sending letters to suspected illegal ﬁle-sharers ﬁnally gets underway, the whole landscape may have been transformed. It remains to be seen whether the DEA proves to be as effective a weapon against piracy as rightsholders had hoped.

Enterprise & Regulatory Reform Bill

4.5 We are concerned that a great part of how copyright law governs the exploitation of copyright content will be removed from Parliamentary scrutiny via proposals in the Enterprise & Regulatory Reform Bill. Orphan Works and Extended Collective Licensing will be managed by schemes introduced by SI rather than in primary legislation. Of particular concern was Clause 57, which equipped the Government with wide-ranging and far- reaching powers to amend, remove or introduce exceptions to copyright via secondary legislation. This raised questions about the purpose of the measure and the Government’s intentions in relation to policy-making and the legislative process around changes to copyright.

4.6 According to statements by officials at the Intellectual Property Office, Clause 57 was a solution designed to meet a technical need, specifically to ensure that criminal penalties for copyright infringement are not limited to a maximum of two years. This is an objective we support. However, the language and scope of the clause were not consistent with this objective, and it is regrettable that the Minister was unable to provide any reassurance on this point during the debate before the Bill Committee.

4.7 We are aware that amendments tabled on 10 October 2012 would clarify that regulations under proposed new clause 28ZA of the Copyright, Designs & Patents Act (Power to add or remove exceptions to copyright) “may make only such provision as may be made under subsection (2) of section 2 of European Communities Act 1972 or such provision as could be made under that subsection if paragraph 1(1)(d) of a Schedule 2 did not apply”. We appreciate that the Government’s stated aim is to “make it clear that clause 57 offers no further power than Parliament already has to make changes to copyright exceptions”. Furthermore, new criminal offences could be created which are punishable by more than two years’ imprisonment. However, we are disappointed that the language and scope of the clause continues to focus on exceptions to copyright, rather than criminal penalties, and will potentially facilitate wide-ranging changes via secondary legislation. In order to bring the clause into line with the stated objective of maintaining penalties it need only state: “The Secretary of State has the power by regulations to maintain penalties for infringement of copyright in accordance with the penalties laid down in the Act”, or similar wording. No mention of exceptions to copyright is needed, or appropriate.

4.8 The NS urges that any changes to the copyright framework should be subject to full Parliamentary scrutiny. Seemingly minor amendments related to changes in the scope of copyright exceptions can have signiﬁcant commercial consequences for organisations that invest heavily in content creation and preservation. Such measures demand thorough-going scrutiny; secondary legislation is not an appropriate vehicle. November 2012

Written evidence submitted by the Voice of the Listener and Viewer

Voice of the Listener & Viewer (VLV) is an independent, non-proﬁt-making association, free from political, commercial and sectarian afﬁliations, working for quality and diversity in British broadcasting. VLV represents the interests of listeners and viewers as citizens and consumers across the full range of broadcasting issues. VLV is concerned with the structures, regulation, funding and institutions that underpin the British broadcasting system.

VLV welcomes the Committee’s inquiry into support for the creative economy and the opportunity to submit written evidence. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w26 Culture, Media and Sport Committee: Evidence

Summary This submission is made on behalf of The Voice of the Listener and Viewer (VLV). — VLV welcomes this inquiry because it is VLV’s view that the broadcasting, television and radio production sectors need support to ensure the production of high quality public service content where there is market failure. We view market failure as a situation in which there is a lack of supply of a genre or type of programming or there is a lack of plurality of supply of a genre on free to air platforms. This most often occurs when the BBC is the only provider of a certain genre or type of programming. — VLV is keen to stress that the value of the broadcasting and production sectors lies not just in the economic contribution they make to the UK but also in the contribution they make to British life, education, society and culture through public service broadcasting. — Television viewing is increasing and is one of the UK’s most popular leisure past-times. There is an opportunity for television to continue to provide informative, entertaining and educative content but without policy which supports high quality public service broadcasting, it is likely that quality, diversity and range of content will diminish and certain genres of programming will disappear from our screens because they are considered less commercially viable. — VLV believes that the upcoming Communications Act is an opportunity for the Government to ensure support for UK originated public service content rather than simply UK-originated content which appears to be the focus of this inquiry and the Government’s Communications Review. If content supported by policy is public service content this change will bring a greater benefit to the public. It will be a missed opportunity if the government legislates for this to be simply UK-originated content rather than UK-originated public service content. — There has been a drop of 20% in investment of UK originated public service programming on the BBC, ITV, Channel 4 and Channel 5 in the past five years. VLV believes the Government should implement policy which incentivises investment in such public service content on the mainstream channels. — There are other income sources which the Government should consider including levies, the abolition of retransmission fees and further tax breaks. This funding could be put into programme making and help the broadcast industries flourish.

Evidence 1. Success of the Broadcasting sector: Despite the fact that the UK broadcasting and production sectors generate billions every year and employ thousands of people, VLV is concerned to stress that the success of Britain’s cultural sector cannot be judged simply in economic terms. 2. Social and Cultural Benefits of Broadcasting: A diverse and thriving UK content production industry is profoundly important because it makes a contribution to Britain’s sense of identity, to British citizens’ knowledge and information about the world around them, and to the richness of British cultural life. It is VLV’s view that the social, cultural and educational benefits of UK-produced public service content (PSC) need to be considered equally as important as the economic benefits of such content when the Government is considering regulation and legislation. 3. Investment in PSC: Investment in UK-originated public service content has declined by 20% in the past five years and VLV believes that the Government needs to incentivise investment in public service content across all platforms especially in genres in which there is market failure. We have made suggestions of how to source funding for public service content and incentivise production later in this document. 4. UK produced content is essential for the UK as an informed, democratic society because it is produced from a UK perspective, reflecting the world we live in from a British point of view. We welcome the Government’s ambition to encourage growth in this market by developing legislation which removes barriers to growth, but VLV believes that there should not be de-regulation at the expense of public service broadcasting content. There still needs to be legislation to ensure the future provision of high quality public service content on television and radio which might otherwise not be provided. 5. Genres of programming which are specialist, such as children’s programming, current affairs or international content need support because the market for them is limited and they are often less commercially viable internationally because they may be produced from a specifically UK perspective. These programmes are essential because they inform us from a uniquely UK perspective what is going on around us in the world. This means that such programming is specifically relevant to us and therefore it may sell less well internationally. 6. Because of the economic and social benefits derived from public service broadcasting it is VLV’s view that investment in UK-originated public service content should be supported through legislation. 7. Commercial PSB’s: It is VLV’s view that it should remain a requirement of the commercial Public Service Broadcasters (ITV, Channel 4 and Channel 5) to fund guaranteed levels of original UK content in return for privileged positioning on the EPG and any other incentives the Government can devise to ensure their cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Culture, Media and Sport Committee: Evidence Ev w27

contribution continues. This contribution should include high quality programming and a diversity of suppliers to provide different approaches and perspectives. It is clear the public wants a plurality of suppliers of public service content.12

Sources of Income for PSC and Incentives for Investment

8. Retransmission Fees: VLV urges the Government to use the upcoming Communications Act as an opportunity to ensure that carriage fees for the Public Service Broadcasters on cable and satellite platforms are abolished in return for guaranteed investment in UK originated public service content (as opposed to simply UK-originated content). If the content supported is public service content, rather than simply UK-originated content, this change will bring a beneﬁt to the public. It will be a missed opportunity if the government legislates for this to be simply UK-originated content rather than UK-originated public service content.

9. In order to ensure that such legislation results in an overall increase in investment in UK content, the amount of ﬁnancial beneﬁt to each broadcaster will need to be assessed, transparency will be required by the broadcasters and Ofcom will need to be given additional powers to ensure that this extra funding is used to produce public service content.

10. We base our argument for abolishing carriage fees for public service broadcasters on the clear evidence of the beneﬁts to cable and satellite operators of transmitting the ﬁve PSB channels. Viewing to these channels in cab-sat homes comprises 2/3 of all viewing if you include the PSB portfolio channels and makes them more attractive to consumers.

11. Additionally, other countries have acknowledged the importance of retransmission fees as a means of returning value to those channels which have invested in original local content, and the UK should follow suit.

12. On principle, VLV opposes any funding generated by the licence fee being paid to a private company for retransmission purposes.

13. EPG Positioning: There is clear evidence that the public expects to have easy access to the ﬁve public service broadcasters and VLV strongly opposes any move which would reduce their prominence on the EPG.

14. Additionally, VLV welcomes the suggestion that EPG positioning could be used as a lever to encourage greater investment in UK-originated content but we urge that this policy should be used to encourage not just UK-originated content but UK-originated public service content otherwise there is little quantiﬁable beneﬁt for the public.

15. VLV acknowledges that any legislation which implements changes to the rules for the EPG need to ensure certainty for broadcasters without which they will not be able to operate effectively.

16. Tax Breaks: VLV welcomes the proposal for tax breaks for drama and high-end TV production and animation. We believe there are other genres which the Government should consider applicable for tax breaks. These are the areas where there is market failure such as children’s and factual programming which according to Ofcom are the genres most at risk. If tax breaks were available for such programming it would provide greater incentive for investment in these areas.

17. Levies: A number of levy options have been suggested in the past, which follow the example of virtually every other European country and are based on the logical principle that those enterprises which exploit value from UK content creation should make some return to the creative pot. These include reuse fees, fees levied on ISP’s and mobile phone operators, and search engine fees.

18. The revenue thus created would help to reduce the funding deﬁcit for public service content and could be used to provide free-to-air high quality competition to the BBC. Unlike pay-TV, this content would be free at the point of consumption, a fundamental public service principle of UK broadcasting. All new levies will have beneﬁts and disadvantages, but none have been the subject of systematic, independent investigation. Ofcom should be asked to make such an assessment as part of the new Communications Act process.

19. Sale of Spectrum: From 2014, it is proposed that broadcasters will be charged for their use of spectrum through a new system of administered incentive pricing (AIP). This funding will go to the Treasury and will represent a further reduction in revenue available for reinvestment in original content. This funding could be diverted into public service broadcasting content and we propose that the Government should investigate this option. November 2012

12 Nine out of 10 people do not want the BBC to be the only provider of public service content in the future (Ofcom’s Second Public Service Broadcasting Review, Phase 2) cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w28 Culture, Media and Sport Committee: Evidence

Written evidence submitted by the Professional Publishers Association (PPA) PPA welcomes the opportunity to respond to the Culture, Media and Sport Committee’s inquiry into the Support for the creative economy.

1. Executive Summary — UK magazine brands are worth £5.63 billion. — Publishing employs 114,000 people in the UK. — Four in 10 globally downloaded and purchased digital magazines are produced by UK magazine publishers.

2. About PPA 2.1 PPA is the trade body for UK magazine, journal, and business media information publishers. A full list of PPA members is available at: http://www.ppa.co.uk/cgi-bin/go.pl/ppamembers/index.html. 2.2 PPA’s membership consists of some 200 publisher members who publish globally renowned and respected consumer, customer and business products, journals, data and directories, in addition to conducting research, organising conferences and exhibitions. 2.3 PPA members offer print, digital and online publications and services, including websites, apps, online and digital versions of print publications, and publications and data only available online or digital channels. UK magazine publishers are global leaders: 40% of digital magazines downloaded internationally are produced by UK magazine publishers. 2.4 PPA members are significant contributors to the UK creative industries. The total value of the UK magazine and business media industry is estimated at over £5.63 billion. The UK publishing industry directly employs 114,000 people.13 2.5 We are surprised that the Committee decided to focus on a small group of industries, ignoring UK companies that are embracing and innovating with digital technology. Digital magazines and products produced by PPA members have as much in common with music and film as newspapers and books. They contain rich, interactive experiences, both editorially and in their advertising. Whereas for other parts of the publishing and creative sectors, digital is just seen another route to market, magazine brand publishers see it as another platform on which to innovate. Publishers are producing Apple Newsstand specific products, rather than putting a product in a different form. 2.6 The shift in consumer behaviour and consumption patterns creates both challenges and opportunities for UK publishers. Historically, the route to market was through newsstand and subscription sales of the printed product; publishers now operate on multiple platforms on a variety of devices through a number of channels.

Culture, Media and Sport Committee: Evidence Ev w29

doctrine. The lack of legal precedent in deﬁning the scope of “fair use” relevant to law within the UK is likely to increase burdens for rights owners and users. This is because they will have to turn to the courts for interpretation of “fairness” within the scope of a new doctrine. Rather than promoting creativity and innovation by new businesses, fair use favours existing large businesses who can afford to litigate.

3.6 Instead of a fair use approach, it is important that the Government acknowledges that the scope of exceptions, such as the educational exceptions currently permitted under s.35 and s.36 of the Copyright, Designs and Patents Act 1988 (CDPA), can be addressed within ﬂexibility afforded by both International Copyright Treaties and the EU law linked to their implementation.

3.7 What is currently clause 66 (formerly clause 57) of the Enterprise and Regulatory Reform Bill raised concerns within PPA membership about the potential scope of its application and the process by which copyright Regulations relevant to the future scope of copyright limitations and exceptions might be drawn up and applied in law. Government amendments laid for the Report Stage in the House of Commons helpfully clariﬁed that changes under the provisions of the clause will be limited to EU law (and not exceptions that rely upon non-EU rules (such as recognition of a right to public performance)). The amendments have been welcomed by PPA in that they provide a clearer statement about the intent of the clause. However, for publishers, concerns remain about the process by which Regulations may be published pursuant to the Regulations.

3.8 PPA would expect the following points to be addressed as clause 66 (formerly clause 57) of the Enterprise and Regulatory Reform Bill continues its process through Parliament. Reassurance is needed about preparation and publication of Impact Assessments that link to possible Regulations linked to speciﬁc elements of the optional exceptions under Article 5 of the EC Copyright Directive. These individual Impact Assessments must appropriately cross refer to others that may be relevant to other SI’s under consideration. If, as a result of such publication, Parliamentary Counsel argue that one set of Regulations should cover more than “one” issue—then appropriate cross reference back to the individual Impact Assessments must be possible. As little “bundling” as possible will be important to avoid “blurring “impact, whilst also protecting transparency and consistency whenever possible. A reasonable time must be allowed between publication of the above Impact Assessments and release of proposed Regulations for implementation from 1 April or 1 October in any year.

3.9 “Timetabling reassurance” within any process for the publication of any proposed new Regulations reliant upon clause 66 (formerly clause 57) of the Enterprise and Regulatory Reform Bill will particularly important for stakeholders as rights owners await publication of updated Impact Assessments linked to proposals under consideration following the Government’s recent Consultation on Copyright, and possible changes to scope of copyright exceptions and limitations.

4. Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

4.1 PPA committed to working in partnership with Academic institutions and members are keen to help inform course content to ensure it meets employer needs. Our accreditation scheme ensures courses are up-to- date and helps secure employment for graduates. Access to academia is piecemeal, however, and there is resistance to employer engagement and inclusion of “practical skills” in academic provision. Those courses that do work with us value the service and insight we provide.

5. The work of the Creative Industries Council and other public bodies responsible for supporting the sector

5.1 Creative Skillset has disbanded the Council that used to represent the Publishing Industry leaving without informed, employer comment on its activities. Publishing has been part of Skillset’s footprint for some four to ﬁve years and there has been very little tangible beneﬁt to employers from the relationship. Indeed, Skillset has duplicated much of the work already being done by employers and PPA around careers promotion and accreditation, and much needed projects (research; support for diversity mentoring) have not received support or funding.

5.2 It would be fair to argue that the Creative Industries Council (CIC) does not represent the breadth of skills, talent, businesses and products produced by UK magazine brand publishers. There is not a single representative on the CIC from this part of the creative industries.

5.3 It would seem that the output of the CIC has been limited at best, and its remit and role are poorly deﬁned. It should be the place for trade associations, businesses, and industries that have a commitment and are based within the UK. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w30 Culture, Media and Sport Committee: Evidence

Written evidence submitted by Royal Borough of Kensington and Chelsea 1. Submission from Donna Pentelow, Head of Culture on behalf of Royal Borough of Kensington and Chelsea, Town Hall, Hornton Street, London W8 7NX.

2. Executive Summary — The Royal Borough of Kensington and Chelsea (RBKC) has published a set of proposals regarding future development in the borough and the role of the creative industries in shaping them. — These proposals on Cultural Placemaking in the Royal Borough of Kensington and Chelsea place culture and the creative industries at the heart of future development. — RBKC believe that it is in an excellent position to connect developers to the creative content of the borough, and thereby both to animate and add value to their plans. — At the core of this approach is a focus on modern, international excellence: creative thinking and work of an international standard that beneﬁts, visitors, business and residents alike. — RBKC believe that the Council’s new approach will build a stronger and more sustainable creative economy. — In acting on these proposals, RBKC believe that it would become the ﬁrst local authority to undertake a borough-wide approach to cultural placemaking and to integrate culture into the borough’s development through planning. — We see the role of the Council is an enabler and catalyst.

3. Future Development and the Creative Industries 3.1 In May 2012, RBKC, together with Futurecity and BOP Consulting, published Cultural Placemaking in the Royal Borough of Kensington and Chelsea, a set of proposals regarding future development in the borough and the role of the creative industries in shaping them. 3.2 Kensington and Chelsea wanted to examine what has been achieved, look at emerging patterns and map out the right approach for the borough as a whole. RBKC is privileged to have a fabulous cultural mix in the borough, ranging from internationally renowned institutions to creative entrepreneurs, from specialist arts organisations to major creative industries. The borough is also home to more than twenty festivals and an increasing number of practising artists are based here, sometimes working in studios offered by the Council and part-funded by valued partners. RBKC believe that our role as a local authority is to encourage creativity, support it where we can and ensure that all our residents have opportunities to engage creatively in ways that work for each of them individually. RBKC is happy for culture to be a key motif for our borough as its future development is shaped. 3.3 RBKC is in an excellent position to connect developers to the creative content of the borough, and thereby both to animate and add value to their plans. RBKC believe that, armed with a long-term neighbourhood vision and a clear appreciation of the significance of the borough in the wider London context, we are in a strong position to broker successful partnerships that will benefit developers, artists, residents, local businesses and visitors alike. This thinking covers every stage, from inception through the various phases of development, and on to completion and into use. Each development potentially has a different creative opportunity and as the most densely populated three square miles in the UK, we want to ensure we have a framework that has an empathetic fit with the area where it is sited. 3.4 Two months after the publication of Cultural Placemaking, the Mayor of London published the World Cities Culture Report. The Introduction (p. 17) echoes much of the thinking to be found in our own research: 3.5 Culture’s intrinsic and social values have long been recognised. However, in the last 30 years a new view of culture has arisen. It is increasingly seen as a driver of economic growth. A series of developments— among them the rise of the knowledge economy, in which skills and creativity count for more than raw materials; the growth of cultural and urban tourism; the emergence of the ‘creative industries’ paradigm; the theories of Richard Florida, Charles Landry and others, with their emphasis on the role of culture in attracting businesses to cities; and the contribution of the Guggenheim Museum to the regeneration of Bilbao—have led to a new focus on the value of culture within urban development. This view attributes a key role to culture in stimulating long-term economic and social growth in cities—not so much through creating short-term economic returns (though these may occur), but by shaping a sense of place and social space that increases the city’s attractiveness to an educated workforce and the businesses which seek to employ them.

4. Analytical Framework 4.1 In developing the Cultural Placemaking proposals, our thinking was informed by a number of key considerations: — The creative economy contributes 15% of all jobs to the Royal Borough. — There are 4,000 creative businesses in the Royal Borough. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— RBKC is home to some of the world’s most significant museums, artistic institutions and creative businesses. — RBKC is a diverse and creative borough — RBKC’s cultural heritage is as diverse as Exhibition Road and the Notting Hill Carnival. The Royal Borough’s cultural and economic future is modern and internationally focused. 4.2 Our approach to Cultural Placemaking led us to identify the following types of Creative District: — The Established Creative District. — The Organic Creative District. — The Emerging Creative District. — The Planned Creative District. 4.3 These are complemented by a Creative District Profiler, which is a tool developed by to identify the strengths that any neighbourhood can draw on to become a Creative District with an exciting cultural life which is attractive to both visitors and investors. The Profiler also highlights any weaknesses. We define the neighbourhood as a circle extending for half a mile around a central point—equivalent to a ten-minute walk. The neighbourhood is then scored against eight factors associated with successful Creative Districts, with scores derived from robust national and London data sources. The factors are: — Creative Residents. — Younger Residents. — Ethnic Diversity. — Cultural Offer. — Retail Offer. — Public Transport. — Land Availability. — Desirability.

5. Key Features — The proposals in Cultural Placemaking in the Royal Borough of Kensington and Chelsea place culture and the creative industries at the heart of future development — In acting on these proposals, we believe that Kensington and Chelsea would become the first local authority to undertake a borough-wide approach to cultural placemaking and to integrate culture into the borough’s development through planning. — At the core of this approach is a focus on modern, international excellence: creative thinking and work of an international standard that benefits, visitors, business and residents alike. — We believe that the Council’s new approach will build a stronger and more sustainable creative economy. — We see the role of the Council is an enabler and catalyst. It can broker successful partnerships which benefit developers, artists, residents, local businesses and visitors alike. 6. The full publication is available here: Cultural Placemaking proposals.14 I would be happy to submit copies of the print publication on request and please don’t hesitate to contact me if you require any further information. November 2012

Written evidence submitted by the Design and Artists Copyright Society (DACS) 1. Established by artists for artists, DACS (the Design and Artists Copyright Society) is an innovative rights management organisation for visual artists, representing over 80,000 creative individuals including ﬁne artists, photographers and illustrators from the UK and abroad. Based in the UK, and part of a global network of visual arts collecting societies, DACS is committed to maximising revenues for visual artists, thereby contributing to the UK economically, socially and culturally. In 2011 DACS paid royalties of £8.2 million to visual artists. 2. DACS is constituted as a company limited by guarantee under UK law, and is currently governed by a board of non-executive directors comprising representatives from a range of artistic disciplines alongside others drawn from business and the legal profession. 3. DACS provides three rights management services for artists and their beneﬁciaries: — Collective rights management (Payback). — Copyright licensing. 14 http://subscriber.pagesuite-professional.co.uk/subscribe.aspx?source=4&eid=ba4fed3a-ce0e-4797-b565–3b8f54a9d5b2 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— Artist’s Resale Right. 4. As a member of the Alliance for Intellectual Property, DACS endorses the comments made in the Alliance’s submission to this inquiry.

5. Barriers to growth in the Creative Industries 5.1 Artists’ incomes often come from a variety of sources,15 many of which are being threatened by the current economic recession and public funding cuts. Undermining the UK’s copyright framework will create a further barrier to growth in the creative industries. Creative individuals are the engine of the UK’s creative industries and copyright provides a powerful incentive for these creators to carry on producing works. 5.2 Licensing and royalty payments benefit the very people whose content drives their invaluable contribution to the UK economy, and the UK’s reputation as a creative, dynamic and innovative nation. 5.3 Over the past five years, as a not-for-profit organisation, DACS has distributed £34.5 million in royalties to visual artists for copyright licensing, Artist’s Resale Right and collective licensing. This represents a direct financial investment into creativity and innovation. DACS’ total distributions to artists represent almost twice as much as the investment made by Arts Council England to individuals for visual arts related activities over a similar period.

6. Impact of the Hargreaves Review and the Government’s response to it 6.1 DACS welcomes some of the outcomes of the Hargreaves Review of Intellectual Property. We are pleased that the Government is seeking to find solutions for dealing with orphan works, and enabling extended collective licensing. We have also welcomed the introduction of the small claims track at the Patents County Court and the recent publication of the Government’s minimum standards for UK collecting societies. 6.2 DACS agrees that policy and legislation should create the right conditions for economic growth in the UK. But we do not agree that the proposals to extend or introduce copyright exceptions presented in the Consultation are necessarily the means to achieve this objective. Reducing the scope of protection by enabling greater access and free use of copyright protected material does not, in our opinion, support growth in the way the Hargreaves Review claims it will. The Review lacked compelling economic evidence that the extension of copyright exceptions, and the introduction of new exceptions, would actually generate growth as opposed to merely saving costs and by doing so, reduce the incentives for creative efforts. 6.3 The Review of Intellectual Property, and the Government’s response to the Review, supported a call for stronger evidence in policy making. It was disappointing therefore to find many of the Review’s recommendations supported by anecdotal evidence at best. For example, the arguments for a parody exception were not backed up by any evidence to support the assertion that: “Video parody is today becoming part and parcel of the interactions of private citizens, often via social networking sites, and encourages literacy in multimedia expression in ways that are increasingly essential to the skills base of the economy. Comedy is big business.”16 6.4 The case has been made on various occasions that the much sought freedom of using copyright protected works for the purposes of parody is well catered for under the current copyright legislation. 6.5 DACS also feels that in focussing on the larger sectors of the industry, the Hargreaves team over-looked issues specific the visual arts sector. This is reflected in the “one size fits all approach” taken in the Review’s recommendations to extend copyright exceptions, without due consideration of how the impact of widening such exceptions differs between sectors. For example, exceptions for private copying and parody will impact visual art in a very different way to music and films. Furthermore, the consultation process failed to engage adequately with the issues facing creative individuals who constitute the majority of visual arts rightsholders.

7. Impact of the proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament) 7.1 DACS supports the Alliance’s view on this point and is pleased that the Government has chosen to redraft Clause 57 to clarify that this change cannot be used to introduce new exceptions through the backdoor or to widen existing ones in this way.

8. Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this 8.1 The signiﬁcant increase in fees for tertiary education will have a long term impact on the skills base which underpins the UK’s creative industries. There is already anecdotal evidence that arts courses are being 15 “Careers typically are sustained by a portfolio of other activities. Close to half of visual creators (44%) earn all their income from visual creation. 35% had a formal second job.” Source: Martin Kretschmer, Lionel Bently et al, Copyright contracts and earnings of visual creators: A survey of 5,800 British designers, ﬁne artists, illustrators and photographers, Bournemouth: CIPPM, 2011 16 Page 50, Digital Opportunity: A Review of Intellectual Property and Growth (2011) by Professor Ian Hargreaves cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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impacted by changes to higher education in the reduction of the number of students enrolled. This can only be to the detriment of the UK’s creative industries in the long term.

8.2 DACS also believes it to be essential to equip students of disciplines in the creative industries with appropriate professional knowledge. A well-rounded education will enable them to make the best use of their creative endeavours in their work life. It is therefore important to make copyright education and/or other intellectual property courses, as appropriate, mandatory when studying creative disciplines. November 2012

Written evidence submitted by Creative Scotland

Executive Summary — Creative Scotland welcomes this opportunity to respond to the Commons Culture, Media and Sport Select Committee’s inquiry into Support for the creative economy.17 — A report commissioned by Creative Scotland, in partnership with Scottish Enterprise, indicates that the economic performance of the Arts & Creative Industries (A & CI) in Scotland over time has reflected the wider Scottish economy, but has been more cyclical in its performance and more recently has experienced an earlier and steeper recession than the Scottish economy as a whole, with Writing & Publishing and Software a particular influence on this profile.18 Advertising and Architecture have been later exhibitors of this recessionary pattern, as discretionary spending and both public and private sector investment expenditure have declined.19 The report has developed a tailored definition of Scotland’s A & CI based around sixteen industries rather than the thirteen historically used by the Department for Culture, Media and Sport (DCMS). On this basis, Scotland’s A & CI in 2010 accounted for 84,400 directly employed and £3.2 billion GVA.20 Scotland ranks fourth of the twelve UK nations and regions on Creative Industry employment intensity, after London, the South East and Yorkshire.21 — Scotland has adopted a cross agency partnership approach in addressing the development needs and opportunities of the creative industries. Creative Scotland leads the coordination of Scotland’s Creative Industries Partnership (SCIP), which sees it work with the Scottish Government, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, COSLA, the Scottish Funding Council and Scottish Development International in supporting the creative industries in Scotland.22 Industry needs are identified through a series of industry practitioner reference groups. — These industry groups have helped identify a number of consistent barriers to growth across their constituent creative industries:23 — Lack of joined up approach to sector’s growth; — Lack of scale of businesses, business activity and investment; — Inadequate international competitiveness and access to markets; — Inadequate access to appropriate industry skills; — Inadequate access to market intelligence; — Inadequate measurement of success; — Lack of sustainability; and — Lack of access to finance. — Lack of sufficient scale to capitalise fully on the value of their unique IP is one of the main barriers to growth of Scotland’s creative businesses. Effective measures which assist the ability of the sector to identify, maintain and exploit IP rights—and to combat illegal erosion of the value of these intangible assets—are to be welcomed. 17 UK Parliament, House of Commons Culture, Media and Sport Select Committee’s inquiry into Support for the creative economy, 2012, at www.parliament.uk/business/committees/committees-a-z/commons-select/culture-media-and-sport-committee/inquiries/ parliament-2010/support-for-the-creative-economy/ . 18 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p.3, June 2012, at www.creativescotland.com/resources/research . 19 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p.4, June 2012, at www.creativescotland.com/resources/research . 20 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p. 13, June 2012, at www.creativescotland.com/resources/research . 21 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, pp. 22–24, June 2012, at www.creativescotland.com/resources/research . 22 See Creative Scotland, Creative Industries, at www.creativescotland.com/explore/showcase/creative-industries . 23 From Creative Scotland, Reference Group Reports and Recommendations for Design Services, Film, Performing Arts, Music and Product Design, February 2011, unpublished papers. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— Creative Scotland welcomes the UK Government’s current proposals to introduce tax reliefs for animation, high-end television and video games on the lines of current Film Tax Relief (FTR). But the lack of flexibility in Scotland to adapt and customise fiscal incentives for inward creative industries investment is a particular difficulty faced in capitalising on the economic potential of our creative industries. As we noted in our own response to the DCMS Film Policy Review24 earlier this year, film in Scotland is on a much smaller scale—and much more dependent on international co-productions, for example—than its London-based counterparts. And while we understand and support the rationale behind the current UK tax credit system, its limitations in terms of helping the Scottish film industry to compete on a level playing field with our direct international competitors have been documented previously: — The tax credit is valuable, but the smaller scale of the industry in Scotland means that its full cashflow benefit is generally not fully accessible to producers in Scotland, which adds to production costs. — Limited opportunities to enter into co-production arrangements and work outside the UK may compromise the Scottish sector, which is heavily reliant on co-production finance. — Creative Scotland also shares the view of other important stakeholders across the UK that the new tax credit for high-end television could and should benefit production out of London and South East.25 — Creative Scotland’s role of coordinating the leadership of support for the creative industries via SCIP (see above) involves us working with the universities and other higher and further education institutions. Our various industry practitioner reference groups26 have also been very helpful in identifying and designing a range of skills support initiatives. — We believe that genuine clustering has a positive role to play in facilitating innovation and growth in the creative sector. However, public sector support for clustering should be facilitating organic development initiated by the creative industries themselves, rather than directive, unless there is a case for capital investment to be the necessary initiation of a development in a mutually identified location with industry. — Whilst the UK generally as a whole benefits from the international perception of London’s worldwide reputation as a leader in creative and cultural industries,27 much more consideration needs to be given to implementing incentives and policy interventions to benefit the rest of the regions and nations of the UK. The cultural benefits of greater diversity across the UK are perhaps more obvious, but the economic case for the UK as a whole is also significant. Looking at the wider UK economy, a recent CBI report28 makes the case that “successive governments have overlooked pockets of private sector potential because economic policy has focused on closing the gap between regions, rather than realising and maximising the potential within them.”29 With respect to Scotland’s creative economy, we would certainly agree with their view that public policy for growth in the nations and regions needs to be more flexible. — It is important to note that by no means all of the important aspects of public policy which affect Scotland’s creative economy are devolved matters. Broadcasting and film and other creative sector tax reliefs are reserved matters for Westminster, for example, where it is important that the frequently quite distinctive impacts in Scotland are included in the assessment of policy proposals.

Context 1. Creative Scotland is Scotland’s national development agency for the arts, culture, film, TV and creative industries. Formed in July 2010, the organisation was born out of the merger of the Scottish Arts Council and Scottish Screen but it presents the opportunity to deliver a new model for cultural investment and advocacy. Our priorities are: — Identifying, supporting and developing quality and excellence in the arts and culture; — Promoting understanding, appreciation and enjoyment of the arts and culture; — Encouraging as many people as possible to access and participate in the arts and culture; — Increasing the diversity of people who access and participate in the arts and culture; — Realising the value and benefits nationally and internationally of arts and culture; 24 DCMS, Creative Scotland response to the DCMS Film Policy Review, 2012, p.23, at www.culture.gov.uk/consultations/ 8913.aspx. 25 Department for Culture, Media and Sport, TV content Seminar Transcript—16 July 2012, at http://dcmscommsreview.readandcomment.com/tv/ . 26 See reference above at “Barriers to growth in the creative industries, including access to finance” regarding Creative Scotland, Reference Group Reports and Recommendations for Design Services, Film, Performing Arts, Music and Product Design, February 2011, unpublished papers. 27 See above statistics and comments above on Creative Industry employment intensity, under “Context”. 28 CBI, The UK’s growth landscape—Harnessing private-sector potential across the country, 2012, at www.cbi.org.uk/media- centre/press-releases/2012/10/dont-just-rely-on-usual-suspects-for-growth-cbi/ . 29 Don’t just rely on usual suspects for growth—CBI, press release for CBI report, The UK’s growth landscape—Harnessing private-sector potential across the country, 2012, at www.cbi.org.uk/media-centre/press-releases/2012/10/dont-just-rely-on-usual- suspects-for-growth-cbi/ cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— Encouraging artistic and creative work that contributes to an understanding of Scotland’s national culture; — Promoting and supporting industries and commercial activity based on the application of creative skills; and — Providing advice to Scottish Ministers relating to the creative industries specialising in the arts and culture.30 2. Creative Scotland’s role in supporting the creative economy is set out in the Scottish Government’s strategy for the creative industries, our brief being to: — provide research, intelligence and advocacy; — contribute to policy development; and — work in partnership with other bodies delivering support to creative industries.31 3. We note that, according to Oxford Economics, UK wide the creative industries account for 2.55% of GVA, a fall of 0.34% since 2009–10, and that the UK’s international ranking has fallen from 3rd in 2006 to 6th in 2011—although there has been 2% growth in jobs since 2009.32 4. In Scotland, a report was commissioned by Creative Scotland, in partnership with Scottish Enterprise, to carry out an Economic Contribution Study of the Arts and Creative Industries (A & CI). This report indicates that the economic performance of the A & CI in Scotland has reflected the wider Scottish economy, but has been more cyclical in its performance and more recently has experienced an earlier and steeper recession than the Scottish economy as a whole, with Writing & Publishing and Software a particular influence on this profile.33Advertising and Architecture have been later exhibitors of this recessionary pattern, as discretionary spending and both public and private sector investment expenditure have declined.34The report has developed a tailored definition of Scotland’s A & CI based around sixteen industries35 rather than the thirteen historically used by the Department for Culture, Media and Sport (DCMS). On this basis, Scotland’s A & CI in 2010 accounted for 84,400 directly employed and £3.2 billion GVA.36Further adjustments to bring greater consistency of the accounting treatment of the Heritage and Radio & TV sectors with other sectors increases the total GVA to £3.7 billion. However, a health warning needs to be noted in relation to the data, particularly for the Games industry.37Also adding in the indirect (ie supply chain) and induced (ie directly and indirectly employed spending) effects further increases the estimated GVA of the A & CI in Scotland to £6.3 billion and employment to 129,700.38 5. These figures are significantly in excess of the equivalent estimates which would result from adopting the latest DCMS definitions and weightings to Scotland, namely 34,000 employed (1.7% of the Scottish total) and £1.54 billion GVA (1.5% of the Scottish total). However, using these DCMS definitions does allow some comparison with the UK, indicating that in 2010 Scotland accounted for 5.8% of UK Creative Industries’ employment39and 4.5% of UK Creative Industries’ GVA.40 6. In terms of GVA, Publishing is reported to be the industry making the largest contribution to Scotland’s Creative Industries, followed by Advertising, Music and Visual and Performing Arts and Architecture. Compared with the UK as a whole, Architecture and Publishing are reported to be notably above the UK 30 Creative Scotland, Investing in Scotland’s Creative Future—Corporate Plan 2011–2014, March 2011, p. 3, at www.creativescotland.com/sites/default/files/editor/Corporate-plan-spreads-11–3.pdf . 31 Scottish Government, Growth, Talent, Ambition—the Government’s Strategy for the Creative Industries, 2011, p. 8, at www.scotland.gov.uk/Publications/2011/03/21093900/8 . 32 Department for Culture, Media and Sport, Minutes of Creative Industries Council Meeting—12 June 2012, at www.culture.gov.uk/what_we_do/creative_industries/8281.aspx . 33 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p.3, June 2012, at www.creativescotland.com/resources/research . 34 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p.4, June 2012, at www.creativescotland.com/resources/research . 35 The sixteen industries included in scope are Advertising, Architecture, Visual Art, Crafts, Fashion & Textiles, Design, Performing Arts, Music, Photography, Film & Video, Computer Games (although note footnote 12 below), Radio and TV Writing & Publishing, Heritage, Software/Electronic Publishing and Cultural Education; see DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p.28, June 2012, at www.creativescotland.com/resources/research . 36 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p. 13, June 2012, at www.creativescotland.com/resources/research . 37 Even with all of these adjustments, the report by its own admission has not adequately addressed the continuing and widespread challenge of capturing fully the scale of self-employment, sole trading and portfolio and project based working which prevails in the A & CI. Nor has the scale of the Computer Games industry in Scotland been adequately identified in these new data, thought to be attributable to some firms in that industry being classified elsewhere; see DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, pp 2–3, June 2012, at www.creativescotland.com/resources/research. 38 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p.4, June 2012, at www.creativescotland.com/resources/research . 39 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p. 16, June 2012, at www.creativescotland.com/resources/research . 40 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p. 120, June 2012, at www.creativescotland.com/resources/research . cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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average in terms of their relative importance.41 It is also almost certain that, if correctly classified data for Computer Games were available, then this industry would also be notably above the UK average in terms of its significance to the Scottish creative economy.42 As far as Creative Industry employment intensity43 is concerned, though, Scotland’s rate of 5.9 is below the UK average of 8.2. However, this average is greatly affected by the dominance of London, where the comparable figure of 27.6 is actually the only figure above the UK average. Scotland ranks fourth of the twelve UK nations and regions on Creative Industry employment intensity, after London, the South East and Yorkshire.44

Barriers to Growth in the Creative Industries, Including Access to Finance

7. Scotland has adopted a cross agency partnership approach in addressing the development needs and opportunities of the creative industries. Creative Scotland leads the coordination of Scotland’s Creative Industries Partnership (SCIP), which sees it work with the Scottish Government, Scottish Enterprise, Highlands and Islands Enterprise, Skills Development Scotland, COSLA, the Scottish Funding Council and Scottish Development International in supporting the creative industries in Scotland.45 Industry needs are identiﬁed through a series of industry practitioner reference groups.

8. These industry groups have helped identify a number of consistent barriers to growth across their constituent creative industries:46 — Lack of joined up approach to sector’s growth; a lack of co-ordination within and across sectors puts at risk the many growth opportunities. — Lack of scale of businesses, business activity and investment; sectors are typified by small and micro businesses and sole traders with insufficient scale to capitalise fully on the value of their unique Intellectual Property (IP). — Inadequate international competitiveness and access to markets; most sectors now operate internationally but Scotland needs to be more proactive in positioning itself against a background of intensifying global competition. — Inadequate access to appropriate industry skills; the creative industries are being transformed by the digital revolution, changes in working practices and internationalisation; these changes need improved links between education and industry, continuing re-skilling and up-skilling and leadership in driving the changes through. — Inadequate access to market intelligence; small and micro enterprises often lack the resources to afford the top quality and current market intelligence needed to identify and exploit market opportunities. — Inadequate measurement of success; as noted above (under “Context”), there are widespread problems in obtaining consistent, reliable data on the creative industries; this makes it difficult to present a convincing economic case to itself, government and the public sector in order to justify support. — Lack of sustainability; the highly variable flow of activity—both inward and indigenous— generates a fragility and lack of critical mass which makes it difficult to retain key skills and can undermine the sustainability creative sectors. — Lack of access to finance; a lack of access to necessary investment at key stages of product and business life cycles results in individual enterprises being undercapitalised and without adequate working capital. 41 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, p. 13, June 2012, at www.creativescotland.com/resources/research . 42 For example, see UK Parliament, House of Commons Scottish Affairs Committee: Video games industry in Scotland, Second Report of Session 2010–11—Volume I, p.5, 2011, at www.parliament.uk/business/committees/committees-a-z/commons-select/ scottish-affairs-committee/Publications1/previous-sessions/session-2010–12/ , which states: “Evidence from Department for Culture, Media and Sport and Department for Business, Innovation and Skills explained that ‘Scotland is world renowned for excellence in computer games design. With hubs in Edinburgh, Glasgow and Dundee it is responsible for an impressive list of iconic, globally successful games.’ The Association for UK Interactive Entertainment (UKIE) state that Scotland is home to nearly 25% of UK video games companies. Scotland has 46 development companies employing 651 development staff, with the games development sector supporting an additional 1,190 jobs. Annually, Scottish games companies are estimated to invest £30.2 million in salaries and overheads, contribute £27.5 million in direct and indirect tax revenues to the Exchequer, and make a direct and indirect contribution of £66.8 million to the UK’s Gross Domestic Product.” 43 Expressed as the number of employee jobs per ‘000 population. 44 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, pp. 22–24, June 2012, at www.creativescotland.com/resources/research . 45 See Creative Scotland, Creative Industries, at www.creativescotland.com/explore/showcase/creative-industries. 46 From Creative Scotland, Reference Group Reports and Recommendations for Design Services, Film, Performing Arts, Music and Product Design, February 2011, unpublished papers. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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9. The last of these barriers, access to finance, is often cited as the main structural obstacle to growth in the creative industries. Specific areas of concern and suggested solutions raised by our Scottish reference groups included: — Scottish public sector investigation of appropriate financial mechanisms to attract and incentivise businesses; — Development of new equity investment models; — Ensuring sector public procurement processes are accessible to SMEs and are driven by quality criteria rather than by process; — Looking for ways in which the public sector can absorb some of the commercial risk faced by businesses in devoting resources to bidding for public sector work; — Creation of “one-stop-shop” facilities for incubation businesses, with access to business advisors and industry mentors; and — More opportunities for associate artists and companies to work with larger and/or commercial producers across the UK and internationally to develop skills, understanding and networks. 10. It is interesting to note that this output from our work in Scotland appears to be quite consistent with the tenor of the six recommendations regarding Access to Finance noted in the DCMS Minutes of the Creative Industries Council Meeting held on 12 June 2012, namely: — “Government and industry to work together to enable new funding solutions and champion investment opportunities in this sector. — The sector and Government to work together to improve existing business financing interventions and make the most of new ones. — Supply side: Sector experts, HEIs, research bodies and financiers to work together to improve investor readiness and understanding of the sector. Much of the work Creative England intended to undertake in this area depended on a successful RGF bid. — Demand side: Sector to work together to improve investment readiness and understanding of finance among creative industries businesses, enabling them to think beyond the banks, and beyond credit. — Data, knowledge and frameworks—Government and the sector to work together to improve the data collection and availability on this sector, with both top down and bottom up measures. — Help the UK’s creative content businesses build assets and scale so that they can leverage existing success and attract a larger share of the international market to the UK.”47 11. Although there is also a substantial body of opinion which argues that the problems of access to finance are primarily on the supply-side, with potential investors demonstrating a level of ignorance of the dynamics of creative businesses and a failure to understand their true risk profiles, the influential 2011 Demos report, Risky Business, argues that the fundamental barriers for creative industries in accessing finance are mainly demand-side. It suggests that the core problems could be resolved if creative practitioners worked harder to acquire business skills and to understand the real needs of financiers, rather than vice versa. The Demos research found that the following “ingredients of success” were evident in all successful businesses and that a creative business which could demonstrate competence in these areas would be treated no differently by financiers from businesses from other sectors: — “a clear intention to make a profit; — a strong performance in businesses planning; — a clear understanding of the risks that face their businesses, how to assess, manage and mitigate against them; — in-depth experience in the business of the sector; — financial and numerical experts working in mutually respectful partnership with creatives; — an understanding of the importance of good relationships to spot and manage creative talent, and to do deals; — an ability to innovate and adapt to changing business environments; and — an ownership stake in the intellectual property the business is creating.”48 12. The Demos report makes the case that the difficulty is one of investor perception rather than reality. Their evidence indicates that—perhaps surprisingly—the creative industries sector does not show notably higher failure rates than other sectors and that creative industries businesses can actually do better in a tough economic climate, as they tend to have fewer fixed assets, more flexibility in cutting their costs and possibly a greater passion for survival.49 The risky perception may be attributable to those creative businesses which do have a higher risk profile than others “because their business model is based on bringing a stream of new and 47 Department for Culture, Media and Sport, Minutes of Creative Industries Council Meeting—12 June 2012, at www.culture.gov.uk/what_we_do/creative_industries/8281.aspx . 48 Burrows, Helen and Ussher, Kitty, Risky Business, Demos, 2011, pp.16–17, at www.demos.co.uk/publications/riskybusiness 49 Burrows, Helen and Ussher, Kitty, Risky Business, Demos, 2011, pp.15–16, at www.demos.co.uk/publications/riskybusiness cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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unpredictable products to market, rather than because they are ‘creative’.”50The report does accept that there may be a funding gap for this category of new and unpredictable creative product businesses, especially when they are small or new.51 13. A report produced for the Department for Business Innovation & Skills and the Department for Culture, Media and Sport in 2011 by Dr Stuart Fraser of Warwick Business School and IFF Research52 provides further insight. It found that the Creative Industries need to be split into their different sub-sectors to provide greater understanding. So Software, Publishing, Video, Film and Photography and Radio and TV are more likely to have finance applications rejected than non-Creative businesses with similar risk profiles, but Music and Visual Performing Arts and Creative Service businesses (Advertising and Architecture) had similar rejection rates to non-Creative businesses with similar risk profiles. It is suggested that the higher rejection rates for Software and the Publishing, Video, Film and Photography and Radio and TV categories may be attributable to greater uncertainty about the viability of these businesses and/or a misalignment of interests between their needs and those of the finance providers. The research also indicates that some businesses are discouraged from even making finance applications but that this reluctance reflects risk profiles and/or perceived supply conditions for loans rather than whether businesses are Creative or non-Creative. However, availability of collateral is a greater issue for Creative businesses, who are more likely to turn down loan offers due to the terms of the offer, such as requests for personal security. In the words of one finance provider interviewed during the research: — “‘Banks don’t discriminate against the creative industries, but they do discriminate against people who they think can’t repay. It may just be in our [ie finance providers’] eyes that there are more of them in the creative industries.’”53 14. The Access to Finance report’s view is that the root cause of this greater uncertainty among CIBs is that nobody knows, for example, how well a new book or film will sell.

The Role of Intellectual Property The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament) 15. As noted above, lack of sufficient scale to capitalise fully on the value of their unique IP is one of the main barriers to growth of Scotland’s creative businesses. Effective measures which assist the ability of the sector to identify, maintain and exploit IP rights—and to combat illegal erosion of the value of these intangible assets—are to be welcomed. Creative Scotland’s principal role in relation to the protection of IP is an advisory one. Our main objective in this is to ensure that our creative stakeholders (the creative practitioners, creative organisations and creative industries with which we are engaged by means of support or investment) have access to the appropriate advice and support to allow the value of their IP to be fully recognised and exploited. The service provided by the Intellectual Asset Centre in Scotland is key to this understanding in Scotland. It is important to note that of the various classifications of IP, Creative Scotland’s remit relates almost entirely to copyright only. 16. As an advisory body rather than a practitioner, we defer to the appropriate stakeholder representative bodies’ policy stance on such matters as the implementation, practicality and likely effectiveness of the relevant measures contained in the Digital Economy Act. 17. Our key policies on IP were set out in our response to the UK Government’s Independent Review of Intellectual Property and Growth (Hargreaves Review).54 Our main recommendations were as follows: — We propose that UK copyright law be codified in one single statute that becomes the sole point of reference for all aspects of UK copyright law. — We would propose striving to simplify the existing law in a form that can be easily understood by creative practitioners and creative organisations alike and the parties with whom they engage. — There has been a lack of consistency in the approach of the trade bodies, the courts and successive governments when it comes to prevent unauthorised copying and distribution, which needs to be urgently addressed so that stakeholders can plan accordingly. 50 Burrows, Helen and Ussher, Kitty, Risky Business, Demos, 2011, pp.117–118, at www.demos.co.uk/publications/riskybusiness 51 Burrows, Helen and Ussher, Kitty, Risky Business, Demos, 2011, p. 17, at www.demos.co.uk/publications/riskybusiness 52 Fraser, Dr Stuart, Warwick Business School and IFF Research, Access to Finance for Creative Industry Businesses: Report for the Department for Business Innovation & Skills and the Department for Culture, Media and Sport, May 2011, at www.culture.gov.uk/publications/8160.aspx . 53 Fraser, Dr Stuart, Warwick Business School and IFF Research, Access to Finance for Creative Industry Businesses: Report for the Department for Business Innovation & Skills and the Department for Culture, Media and Sport, p.15, May 2011, at www.culture.gov.uk/publications/8160.aspx 54 Intellectual Property Office, Creative Scotland response to the UK Government’s Independent Review of Intellectual Property and Growth (Hargreaves Review), 2011, at www.ipo.gov.uk/ipreview/ipreview-c4e.htm cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— We propose that that consideration be given to the inclusion of copyright law within secondary, further and higher education, as a module within existing courses to which an understanding of copyright law would be relevant and complementary. — We suggest that the best interests of stakeholders in the creative economy are served by pursuing initiatives that promote awareness of the value of creative work to society as a whole both ﬁnancially and culturally. — We recognise the importance of the current debate around whether the new and innovative combined works enabled by digital technology should be automatically regarded as new works under a system along the lines of Creative Commons or whether they should be regarded as unlawful and infringing derivative works in the absence of explicit consent from the owner(s) and author(s) of the original work(s). — We believe that in the digital era, organisations such as Creative Scotland can make a signiﬁcant contribution to economic growth through effective leveraging of a broad range of relatively small investments in the creative sector.

18. We share the views attributed to some members of the Creative Industries Council that a strong UK IP framework is fundamental to the future growth prospects and international ambitions of the UK’s creative businesses and are pleased to note that it will be a standing item at future meetings.55 We also note the intentions of those elements of Part 6 of the Enterprise and Regulatory Reform Bill which pertain to copyright law and we await its progress through the UK Parliament with interest.56

The Role of Taxation

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget

19. As the EC cultural derogation recognises, the use of appropriate tax incentives is a vital part of the support structure for many creative industries. In ﬁlm, for example, it is widely recognised that tailored tax incentives are essential in order to attract talent, production, businesses and investment and to compete on the international—and indeed domestic UK—stage. Creative Scotland also welcomes the UK Government’s current proposals to introduce tax reliefs for animation, high-end television and video games on the lines of current Film Tax Relief (FTR).

20. However, we do believe that more could and should be done to address the different conditions and needs which exist across different parts of the UK. The lack of flexibility (in Scotland) to adapt and customise fiscal incentives for inward creative industries investment has been noted as a particular difficulty faced in capitalising on the economic potential of the creative industries by the Royal Society of Edinburgh, for example.57 And as we noted in our own response to the DCMS Film Policy Review58 earlier this year, film in Scotland is on a much smaller scale—and much more dependent on international co-productions, for example—than its London-based counterparts. And while we understand the rationale behind the current UK tax credit system, its limitations in terms of helping the Scottish film industry to compete on a level playing field with our direct international competitors have been documented previously: — The tax credit is valuable, but the smaller scale of the industry in Scotland means that its full cashflow benefit is generally not fully accessible to producers in Scotland, which adds to production costs. — Limited opportunities to enter into co-production arrangements and work outside the UK may compromise the Scottish sector, which is heavily reliant on co-production finance.

21. We wish to stress that Creative Scotland supports the UK ﬁlm tax credit and would not wish to see it diluted; rather, we are looking for changes (not a major overhaul) which would help ﬁlm in Scotland— particularly with regard to co-productions. 55 Department for Culture, Media and Sport, Minutes of Creative Industries Council Meeting—12 June 2012, at www.culture.gov.uk/what_we_do/creative_industries/8281.aspx . 56 Namely: 1. To provide full copyright protection for the period of the author’s life plus 70 years and to create a power to amend exceptions for copyright and rights in performances without affecting the existing criminal penalties regime; 2. To give the Secretary of State the power to reduce the duration of copyright in existing works which are unpublished, pseudonymous or anonymous; 3. To introduce systems for the licensing of “orphan works”, and the authorisation of voluntary extended collective licensing schemes, and to give the Secretary of State the power to require a licensing body to adopt a code of practice under certain circumstances, and which makes provision regarding licensing of performers’ rights; and 4. To make provision for the implementation of EU Directive 2011/77/EU, whilst retaining the current levels of penalty for infringement of copyright; see UK Parliament, Enterprise and Regulatory Reform Bill—Explanatory Notes, PART 6: MISCELLANEOUS AND GENERAL—Copyright and rights in performances, 2012, at www.publications.parliament.uk/pa/bills/lbill/2012–2013/0045/en/ 2013045en.htm . 57 Royal Society of Edinburgh, Scotland’s creative industries (Response to the Scottish Funding Council’s (SFC’s) request for advice on Scotland’s current position in research relevant to the creative industries), p.2. 58 DCMS, Creative Scotland response to the DCMS Film Policy Review, 2012, p.23, at . www.culture.gov.uk/consultations/8913.aspx. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w40 Culture, Media and Sport Committee: Evidence

22. Creative Scotland also shares the view of other important stakeholders across the UK that the new tax credit for high-end television could and should benefit production out of London and South East.59 We are confident that in Scotland, accompanied by a commensurate investment in infrastructure and skills initiatives, this would additionally attract production and maximise the benefit of the new tax credits.

Skills Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this 23. Creative Scotland’s role in coordinating the leadership of support for the creative industries via SCIP (see above) involves us working with the universities and other higher and further education institutions. As Creative Scotland’s Chief Executive, Andrew Dixon, has commented in the foreword to Scotland’s Creative Economy: the Role of Universities,60 universities make a key contribution to the creative economy through nurturing talent and skills as well as providing a steady flow of workers into the creative industries. Specific objectives include the development of a programme of incubation spaces; and addressing skills and other gaps in the ladder of opportunity for creative people. 24. Our various industry reference groups61 have also been very helpful in the formulation of a range of skills support initiatives. 25. We are pleased to note the UK Government’s view that investment in UK skills and talent development is a critical element to sustaining UK production and that, in developing the new creative tax incentives, it will consider how the benefits from the tax reliefs can be used to invest in UK skills and talent development.62 Creative Scotland and Scottish Enterprise have jointly been tasked to conduct an interview based survey of the current state of skills needs in television production in Scotland to inform a bespoke new entrants programme.63 We have suggested that skills investment should be awarded based on this planned survey of skills needs in Scotland we are about to conduct (rather than a central collection dispersed by formula on UK wide priorities) in order that the potential response to the tax credit can be maximised in Scotland.

The Role of Clusters and Hubs The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication 26. Within Scotland, Glasgow (21%) and Edinburgh (19%) combined account for 40% of total A & CI employment and also exhibit the highest A & CI employment intensities. The other areas with employment intensities above the Scottish average are the Scottish Borders (where Textiles are important), Aberdeen, Dundee and Orkney and Shetland (where a number of industries, including Heritage and Fashion & Textiles are important).64 27. We believe that genuine clustering has a positive role to play in facilitating innovation and growth in the creative sector. However, public sector support for clustering should be facilitating organic development initiated by the creative industries themselves, rather than directive, unless there is a case for capital investment to be the necessary initiation of a development in a mutually identified location with industry. 28. This is not to say that public policy interventions are not needed. One of the common themes across many of the UK’s creative industries is that of the damaging effects of their over concentration in London and the South East of England.65The benefits from clustering in the creative industries are in the main very different from the economies of scale which may be achieved from mass manufacturing, increasingly so in an era of digital communications. Much more consideration needs to be given to implementing incentives and policy interventions to address this widespread market failure and to counteract the resulting economic and cultural damage to the UK’s creative economy. The BBC’s and Ofcom’s regulatory measures to promote television production outside the M25 illustrate the potential benefits. 29. Criticism of the over concentration of the creative economy in London and the South East should certainly not be viewed as a criticism of or threat to London and the South East itself, but rather as a criticism 59 Department for Culture, Media and Sport, TV content Seminar Transcript—16 July 2012, at http://dcmscommsreview.readandcomment.com/tv/ . 60 Universities Scotland, Scotland’s Creative Economy: the Role of Universities, 2011, at www.universities-scotland.ac.uk/ index.php?mact=News,m3,default,1&m3category=Publications&m3number=5&m3summarytemplate=PublicationsIndex& m3dateformat=%25Y&m3pagenumber=2&m3returnid=17&page=17 . 61 See reference above at “Barriers to growth in the creative industries, including access to finance” regarding Creative Scotland, Reference Group Reports and Recommendations for Design Services, Film, Performing Arts, Music and Product Design, February 2011, unpublished papers. 62 HM Treasury, Consultation on creative sector tax reliefs, 18 June 2012, p. 31, par. 6.13, at.www.hm-treasury.gov.uk/consult_ creative_sector_tax_reliefs.htm . 63 This followed a recent meeting of industry and training bodies (including Creative Skillset Scotland). 64 DC Research, Economic Contribution Study: An Approach to the Economic Assessment of the Arts & Creative Industries in Scotland—Final Report, pp. 34–40, June 2012, at www.creativescotland.com/resources/research . 65 See above statistics and comments above on Creative Industry employment intensity, under “Context”. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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of policy failure for the rest of the UK. The cultural deficit is perhaps more obvious, but the damaging economic consequences for the UK as a whole are also significant.66 Looking at the wider UK economy, the recent CBI report, The UK’s growth landscape—Harnessing private-sector potential across the country,67 makes the case that “successive governments have overlooked pockets of private sector potential because economic policy has focused on closing the gap between regions, rather than realising and maximising the potential within them.”68 The CBI argue that the scale of the current economic predicament needs every part of the UK to grow and that this will require public policy for regional growth which is flexible rather than a “one-size-fits- all” approach.

The Role of Public Bodies The work of the Creative Industries Council and other public bodies responsible for supporting the sector 30. We note that the Terms of Reference of the Creative Industries Council clarify that, as the policy areas under consideration are largely devolved, the Council confines its remit to England only, working closely with the Devolved Administrations where appropriate.69 31. As noted above (at “Barriers to growth in the creative industries, including access to finance”), Creative Scotland leads the coordination of Scotland’s Creative Industries Partnership (SCIP), which sees it work with other public bodies to support the creative industries in Scotland.The industries are represented through a series of industry practitioner reference groups, working to identify industry requirements.70 32. It is important to note that by no means all of the important aspects of public policy which affect Scotland’s creative economy are devolved matters, however. Broadcasting and film and other creative sector tax reliefs are reserved matters for Westminster, for example, where it is important that the frequently quite distinctive impacts in Scotland are included in the assessment of policy proposals. November 2012

Written evidence submitted by The Victoria and Albert Museum FROM: THE VICTORIA AND ALBERT MUSEUM, SUBMISSION PREPARED BY EMMAJANE AVERY, HEAD OF THE DEPARTMENT OF LEARNING

1. Summary — The V&A believes that museums and galleries are a vital resource for UK creative industries and play a key role in showcasing UK creativity and innovation. The V&A makes an essential contribution to sustaining Britain’s leading role in creative design by making the best of historic and contemporary design available through exhibitions, programmes, acquisitions and commissions. — One of the museum’s key strategic aims is “to promote, develop and contribute to the UK creative economy”. 66 A pertinent example from the creative industries of both the economic and the social rationale behind public policy interventions is provided by Ofcom, who have a stated bias against regulatory intervention, but nevertheless conclude that there are some enduring major market failures in broadcasting in the UK, “the main ones being the nonrivalrous nature of broadcasting combined with high levels of externalities, such as the opportunity to create broader social value.” Ofcom also stress that market failure is not the only reason for intervention in broadcast markets: wider public and social policy issues are also important continuing reasons for doing so; see Ofcom, Ofcom’s Second Public Service Broadcasting Review—Appendix 11: Market failure in Broadcasting, 2008, pars. 1.27–1.30, at http://stakeholders.ofcom.org.uk/consultations/psb2_1/ . Ofcom also refer to the following sources of social value which they identiﬁed: — “access and inclusion—for example value derived from universal access and facilitating access to public services; — quality of life—for example value derived from providing access to services which promote quality of life, perhaps by helping to support or promote work-life balance or family life; — belonging to a community—for example value derived from allowing people with similar interests to communicate or from participating in your local community; — educated citizens—for example value derived from services with educational content or child-oriented services; — cultural understanding—for example value derived from services which reﬂect and strengthen cultural identities or promote diversity and understanding of other cultures; — informed democracy—for example value from services which provide information which facilitates democratic debate; and — social bads—this can include negative value derived under any of the headings set out above;” see Ofcom, Ofcom’s Second Public Service Broadcasting Review—Appendix 11: Market failure in Broadcasting, 2008, par. 1.8, at http://stakeholders.ofcom.org.uk/consultations/psb2_1/ . 67 CBI, The UK’s growth landscape—Harnessing private-sector potential across the country, 2012, at www.cbi.org.uk/media- centre/press-releases/2012/10/dont-just-rely-on-usual-suspects-for-growth-cbi/ . 68 Don’t just rely on usual suspects for growth—CBI, press release for CBI report, The UK’s growth landscape—Harnessing private-sector potential across the country, 2012, at www.cbi.org.uk/media-centre/press-releases/2012/10/dont-just-rely-on-usual- suspects-for-growth-cbi/ 69 Department for Culture, Media and Sport, Creative Industries Council—Terms of Reference, September 2011, at www.culture.gov.uk/what_we_do/creative_industries/8281.aspx . 70 See Scottish Government, Growth, Talent, Ambition—the Government’s Strategy for the Creative Industries: Putting the right structures in place—better alignment of the public sector/Ensuring effective engagement with the creative industries , 2011, pp. 9–11, at www.scotland.gov.uk/Publications/2011/03/21093900/8 . cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— 42% of all visits to the V&A South Kensington (1,100,500 out of a total audience of 2,888,700) during 2011–12 were made by professionals, students and teachers in the creative industries. — The V&A’s public events programme seeks to highlight creative practices and bring the best designers working today to the consciousness of the public, through exhibitions and other public- facing events. — Our education programme has creative practice at its heart and much of it is led by creative industry professionals so that people learn new skills first-hand. 88% of pupils are more interested in working in the creative industries and 85% have a better understanding of the range of career options in these areas as a result of attending our annual creative careers day for secondary school pupils. — “V&A Connects” events are run with the express purpose of inspiring the new generation of designers. They bring together undergraduates, postgraduates and young start-up companies with innovative practitioners, writers, business people and thinkers to foster creativity, entrepreneurship and the exchange of ideas and skills. — The V&A is an active employer of creative professionals through capital redevelopment projects, commissions, installations, retail products and teaching opportunities. — True to its founding principles of inspiring the makers and consumers of design, the V&A works extensively with creative professionals who want to research the collections in order to inform their own practice. Many of the products of this collaboration find their way onto catwalks, on shop floors and into people’s homes.

2. Introduction/Background The V&A believes that museums and galleries are a vital resource for UK creative industries and play a key role in showcasing UK creativity and innovation. The Victoria and Albert Museum was established in the aftermath of the 1851 Great Exhibition with the express purpose of inspiring the makers and consumers of design through exhibiting the best in contemporary art and design. In 2012 it continues to inspire creativity and actively contribute to creative practice. One of the museum’s key strategic aims is “to promote, develop and contribute to the UK creative economy by leading the ﬁeld in debate, inspiring designers and makers, commissioning excellent design and stimulating enjoyment and appreciation of art, design and performance”. The V&A makes an essential contribution to sustaining Britain’s leading role in creative design through exhibitions, capital redevelopment projects, public events and activities, commissions and acquisitions, and access to expertise, collections and archives for creative practitioners.

3. Visits by Professionals, Teachers and Students in the Creative Industries The creative industries audience is a key one for the V&A. In the ﬁnancial year 2011–12, 42% of all visits to the V&A South Kensington (1,100,500 out of a total audience of 2,888,700) were made by professionals, students and teachers in the creative industries. This was up from 28% of visits in the previous year. This was in part driven by a concerted focus within our exhibition programme (see item 4).

4. Exhibitions The V&A’s exhibition programme seeks to showcase creative talent to give the public access to the best in historic and current art and design practice as well as inspire current and future generations of practitioners. In 2011–12 the temporary exhibitions programme included “The Power of Making”, an exhibition of craft skills with a workshop/making space at its heart. 56% of visitors to this exhibition came from the creative industries. In the same year we showed “Postmodernism” (62% of visitors were from the creative industries) and Japanese fashion designer Yohji Yamamoto (71% creative industries audience). During summer 2012 we highlighted British design talent, through a headline exhibition of “British Design 1948–2012” (62% creative industries audience), a smaller exhibition on the design process of Heatherwick Studios, with their acclaimed design for the Olympic cauldron at its heart, and 13 displays on British design innovation from an exploration of the regeneration of King’s Cross to a display of English topographical watercolours. 5. Public Events The V&A’s public events programme seeks to highlight creative practices and bring the best designers working today to the consciousness of the public. Examples include: — Fashion in Motion, a free full-scale public catwalk show run three to four times per year. Recent shows have featured Yohji Yamamoto, Peter Jensen and Olivier Saillard. — Weekly lectures by top artists, designers, writers and critics, including recent talks by Christian Louboutin, Gilbert and George, Richard Rogers, Mary Quant and Paul Smith. — London Design Festival, London’s annual festival of contemporary design held in September each year, with its hub at the V&A. This includes displays, installations and events which in 2012 attracted 111,583 people to the V&A, a rise of 69% on normal visitor ﬁgures at this time of year. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— The annual Digital Design Festival, where public of all ages and abilities, from under 5s to digital experts, can see the latest in digital design. This year 36 artists contributed and 19,000 participants took part over two days.

6. Schools, Colleges, Youth Inclusion: Inspiring the Next Generation — Our secondary school programme has skills and creativity at its heart and is led by practitioners, often at the top of their game. For example a project with Key Stage 3 students was led by Heatherwick Studios earlier this year. Student, teacher and designer feedback was overwhelmingly positive. For example, “this project helped me be more creative… and…put my all into something when normally I wouldn’t” (pupil), “The project has made us look at the way we deliver ideas and projects and made us realise we need to take a step back. We noticed the students working in new ways because of this project. Students have learnt…what it is really like to be a designer” (teacher). — Teachers have told us that students have obtained better grades than expected, that our schools programmes have made them rethink their teaching of design and that students have gone on to study creative courses at art school as a result of working with us. For example, Esher College took part in an animation project in February 2012 and wrote to us saying: “the V&A project has become very important to us in challenging and motivating the most able pupils to reach their full potential. Indeed we have two students progressing directly to degrees in animation this year….The work they produced in response to this brief was central to their portfolio success.” — Our annual Creative Quarter careers day welcomes over 2,000 students who come to hear key designers talk about getting into their industries (such as, this year, fashion designer Paul Smith, architect Ivan Harbour, of Rogers, Stirk, Harbour and Partners, and Christine Neilsen, Head of Womenswear Design at Alexander McQueen). Research from 2010’s Creative Quarter shows us that 88% of pupils who attended are more interested in working in the creative industries, 69% are more interested in studying creative arts or science subjects and 85% had a better understanding of the range of career options in the creative industries as a result of attending the day. — We have a dedicated Higher Education and Creative Industries programme where we work with a wide range of higher education institutions and often broker collaborations between universities and industry. We place an emphasis on career progression and help students prepare for the career of their choice. For example V&A Connects is a Friday evening event programme for undergraduates, postgraduates and young start-up companies. V&A Connects bring together these audiences with innovative practitioners, writers, business people and thinkers to foster creativity, entrepreneurship and the exchange of ideas and skills. We have worked with the RIBA, onedotzero, D&AD, the Guild of Creative Entrepreneurs, Time Out and the Design Council among others. Example subjects for these events include “The Future of Magazines”, “Marketing for You and Your Business”, “Fashion Start-Ups” and “V&A Connects with Pearlﬁsher” (the brand and packaging design agency that include Innocent, Green and Blacks, Absolut and Waitrose among its clients). — As a result of exposure from taking part in V&A Connects and a similar event for students called Digital Futures, a number of participants have remarked on their careers taking off, for example Amy Congdon, a postgraduate from CSM MA Textile Futures, has undertaken a three month residency at SymbiotcA in Perth, Australia, Amy Pliszka has had her work featured in the V&A as part of London Design Festival and also in various publications, and Paulo Goldstein is on the cover of FRAME magazine this month. — Examples of the multiple university projects we run include a collaboration between Camberwell College of Art and Design and representatives from a range of Shefﬁeld-based industries highlighting traditional industries use of new technologies and markets to sustain their skills and businesses, as well as students showcasing their own commissions and highlighting future directions in metalworking as inspired by the museum’s pewter collections. Another project saw 50 performance students take over the museum for the weekend with their own interpretations of scenes from Shakespeare, seen by over 5,000 members of the public. — Staff are also actively engaged in supervising PhD students and offering apprenticeship training for young people. An example is the AHRC Collaborative Doctoral Awards (also known as CASE awards) which are intended to encourage and develop collaboration and partnerships between Higher Education Institution (HEI) departments and non-academic organisations and businesses. — We have an active youth inclusion programme, targeting young people not in education, employment or training, to learn new creative skills through working with us and with designers. We have worked in partnership with youth inclusion projects such as East Potential, Urban Development, Employment Prospects, the Stephen Lawrence Centre, Protégé, the Al Manaar Muslim Centre and many others to help young people acquire new design skills and for some of them to make the leap into creative careers. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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7. Artists and Designers at the Heart of the Museum: Commissions, Employment and Residents — The Museum’s residency programme sees a minimum of four artists/designers per year take up residence in one of the three studios in the museum. Residents are selected by open competition and, while they are in residence, make their own work, take inspiration from the collections and staff and take part in activities with the public. The Residents bring the art of making into the historic museum context. They have gone on to win commissions, prizes, awards and have their work acquired by the V&A as a result of their residencies. — The V&A is also an employer of creative professionals, whether through engagement of architectural practices such as Howarth Tompkins, ZMMA, AL_A on its gallery projects, working with designers on products for retail, regular commissions (for example, for gallery furniture, exhibition design and contemporary installations) or through engaging artists and designers to deliver our public programme of events. — A signiﬁcant part of the V&A’s work with the creative industries centres on the regular requests we get from creative professionals who are seeking inspiration for their work. For example, Vivienne Westwood, Erdem, Richard Nicoll, Tom Ford, Dries Van Noten, Mary Katrantzou, Yohji Yamamoto, Chanel, Giles Deacon and Paul Smith are just some of the designers who have recently visited the archive for inspiration, some directly referencing the V&A’s collections within their own creations on the catwalk. The power the V&A’s collections have on some of our best designers is summed up by Dame Vivienne Westwood, who stated: “The V&A has been a big experience for me from the time when I ﬁrst came to London, aged 17… it has continued to thrill me when I research in your archives and visit your exhibitions of excellence.” November 2012

Written evidence submitted by the Crafts Council The Crafts Council is England’s national development agency for contemporary craft. It aims to build a strong economy and infrastructure for contemporary craft, to increase and diversify the audience for contemporary craft and to champion high quality contemporary craft practice nationally and internationally. As the national development agency, the Crafts Council works to raise the proﬁle of contemporary craft through critical debate and by building an evidence base demonstrating the nature and value of craft. It supports makers’ professional development, builds the market for contemporary craft by running fairs and promoting export, and works to encourage participation and learning, promoting opportunities for interaction and informal engagement with craft. The Crafts Council welcomes the opportunity to contribute evidence to the Committee for Culture, Media and Sport’s inquiry into support for the creative industries. Our comments are speciﬁc to craft and cover value, skills and employment in the contemporary craft sector through responses to relevant questions posed by the committee. Our response draws on evidence from our Continuing Professional Development71 (CPD) and education programmes as well as extensive Crafts Council research72 investigating patterns of work and education, skills and training issues in the contemporary craft sector.

Introduction Craft holds a strong position within the creative industries. In 2010, estimated income for UK craft businesses was £457 million, comparable to income of £512 million for London’s West End theatres and £316 million for music downloads. The combined Gross Value Added of craft (defined as how much value makers add by transforming their raw materials into finished products) was £220 million in 2010.i Craft is also amongst the most entrepreneurial of the creative industries sectors. With 88% of all makers running their own businesses,73 self-employment is almost three times more common in craft than across the creative industries as a whole,74 and over six times more common than in the overall UK working population.75 The growth of online retailing and digital manufacturing opportunities, combined with latent export potential, mean there is still considerable scope for entrepreneurial expansion. Looking outwards, craft makers make a far greater contribution to other creative industry sectors than is widely realised, from supplying bespoke fabrics and accessories for the couture and film & television industries, to designing more realistic virtual materials for use in online gaming environments. In the wider economy, by partnering with industry they help to unlock innovation in biotechnology, healthcare, manufacturing76 and tourism amongst other sectors.ii 71 www.craftscouncil.org.uk/professional-development/maker-development/crafts-council-collective/ 72 www.craftscouncil.org.uk/professional-development/research-and-information/r-and-i/ 73 Craft in an Age of Change 74 DCMS Creative Industries Economic Estimates December 2010: www.culture.gov.uk/publications/7634.aspx 75 Labour Market Statistical Bulletin, June 2011: www.statistics.gov.uk/StatBase/Product.asp?vlnk=1944 76 www.assemble.org.uk/ cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Despite its strengths, as a sector comprised mainly of sole traders, craft faces specific challenges. For example, there is little capacity at the individual business level for R&D, for investment in new technologies, or for developing the industry partnerships that are so crucial to innovation. Similarly, finance can be difficult to obtain. The craft sector is also remarkably diverse—ranging from small-scale manufacturers to individual makers— for its relatively small overall size (23,000 businesses in 2010, compared to 232,000 businesses that define themselves as “design”). The sector also includes makers such as Tom Dixon77 and Thomas Heatherwick,78 both supported in their development by the Crafts Council, who progressed to embrace new disciplines in their work. Whilst this diversity gives the sector its vibrancy, it also inhibits sector cohesion and network building.

Consultation Issues 1. How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games The London 2012 medals created by craft makers Lin Cheung and David Watkins were key to the visual identity of the Games, but contemporary craft also played several other important roles at London 2012, including being highly visible at the British Business Embassy which included a showcase of 21 pieces of exceptional contemporary craft. BBE hosted over 3,000 business leaders over the course of the Games, generating international trade and inward investment deals valued at £11 billion overall. The event was certainly successful in strengthening the proﬁle of craft makers within the international marketplace, and in helping to sell their work—we would welcome similar events being hosted again in future. Speaking at Assemble 2012: the Crafts Council conference, Arts Council England, London’s Executive Director Moira Sinclair highlighted the importance of craft to the Games. Ms Sinclair’s address connected the role of makers in the industrial revolution—as celebrated in the London 2012 opening ceremony—with those whose work featured in the Cultural Olympiad celebrating personal endeavour and collective skill. The success of these large scale contemporary works highlights the beneﬁts of including craft in future programmes designed to showcase the UK’s creative industries. As she said, “Craft has played a pivotal role in celebrating UK plc, our talent and creativity, our skilled workforce and our unique way of seeing the world.”

2. Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector In many ways, the challenges faced by craft businesses in fulfilling their innovation potential and contributing to UK competitiveness are similar to those of other creative micro-enterprises. Specific barriers to growth we believe can be addressed by Government policy include the following:

Access to finance Because they lack financial backing, sole traders can find it difficult to access bank loans and other sources of private finance. Creative sole traders suffer from the mis-perception that the commercial success of their work cannot be predicted from past performance.iii Sub-contracting rather than employing others—and operating from home rather than from dedicated business premises (as 21% of makers do)—can further raise perceived risk for smaller businesses. The relatively slow growth trajectory typical of many creative businesses in their early years is also a perceived issue for investors. Improving access to finance significantly increases makers’ capacity to invest in the equipment, training and R&D that creates growth. We can say this with confidence because craft businesses already have a track record in making the most of financial investment.iv Some measures are in place, notably Arts Council England’s pilot Creative Industry Finance scheme in which the Crafts Council is a promotional partner. This scheme will deliver business development support to around 100 creative enterprises and loan finance to an estimated 35—40 businesses in Yorkshire and Humber and the Greater London area. It represents a significant step forward, but requires a commitment to expansion, informed by its year-long pilot phase, if it is to achieve its aims of enabling sustainable business growth and supporting talent development. Government could take a leadership role on addressing access to finance amongst creative content producing businesses—including creative enterprises—by supporting and expanding this scheme beyond its pilot phase. In particular, we would recommend that Government and the sector work together to bring a wide range of funding and investment partners into the scheme and use findings from the pilot to improve the visibility and appreciation of the sector’s business successes with these partners as well as with analysts and business journalists. 77 www.tomdixon.net/ 78 www.heatherwick.com/ cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Accessibility of growth schemes and incentives Certain growth schemes are not open to sole traders. The Regional Growth Fund, for example, is open to sole proprietors for projects valued at £1 million or more, a scale of project that would inhibit most craft makers from applying. It is also open to consortia of SMEs—including micro- enterprises—but requires a level of investment in management and co-ordination time that most sole traders are unable to commit. We would suggest that Government policy is adjusted to enable individual SMEs to contribute to the success of such schemes. Other schemes are open to SMEs but have low visibility amongst “arts” based businesses, who are less likely than businesses operating in more commercially-oriented sectors to engage with business support networks. These schemes include the Make it in Great Britain Challenge, the relented Manufacturing Advisory Service and the new Catapult innovation centres, as well as the Department of Business, Innovation and Skills’ business mentoring for companies moving into new markets, and UK Trade & Investment’s online peer-to- peer self- help community for exporters. The challenge here lies in marketing these schemes in ways that genuinely engage a wide range of businesses. While sector support agencies including the Crafts Council are active in “getting the message out,” many makers and other independent creative businesses still assume these schemes are “not for them”. We recommend that Government works with sector support agencies to establish the most effective way of collaborating, in order to address this barrier to growth. These agencies, if well connected with the businesses in their sector, can act as trusted intermediaries and brokers here as the Crafts Council is currently doing with the Creative Industries Finance pilot. We also recommend that Government departments ensure that appropriate sectoral expertise is embedded in the work of departments originating growth policies and schemes. The evolution of Business Link into an online service provides a good opportunity for this approach to be tested, with content being developed and positioned in a way that meets a range of different sector needs.

Unfulfilled export potential Online selling has created a global export market that, according to research, may offer stronger growth opportunity for makers than UK domestic sales.v The UAE and the BRIC countries are seen as being particularly strong emerging markets for British craft. Wide disparities in export rates across the UK suggest that there is significant latent growth potential in this area. In England, whilst exporting makers currently generate an average of 20% of their business revenues from international sales, only around 30% of UK makers currently export.vi Again, there is a strong need for makers to be encouraged and supported in identifying and engaging with export opportunities. In addition, there is a need to build skills and confidence at the individual business level. UKTI’s new export support programme—incorporating trade show access and market research funding—is a great opportunity for makers that, like the growth schemes mentioned above, requires brokering from trusted sector agencies. We recommend that Government works with these agencies on strategies for engaging creative sectors with this and other export-related programmes. On a strategic level, we recommend that it tasks UKTI with continuing to develop its work with creative industries sector trade bodies, to ensure rolling programmes of support that enable long-term strategic planning. We see the GREAT campaign—led by the DCMS but involving a range of other agencies—as a strong example of strategic collaboration at the departmental level.

4. The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget The majority of available tax reliefs are not accessible to craft businesses. For example, R&D tax credits—designed to catalyse innovation amongst small and medium enterprises (SMEs)—exclude sole traders as they are only available to companies liable for Corporation Tax. Business rate relief, meanwhile, is not available to the 21% of makers who work informally from home. We therefore recommend retaining the 2012 tax reliefs and extending them to allow home business premises to qualify for business rate relief, and R&D tax credits to be made accessible to businesses not registered for Corporation Tax. We also recommend continuing current tax relief for start-up SMEs and extending these for a further year. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Finally, we recommend that any tax reliefs designed to stimulate growth in the creative industries be made available to the entire sector. The current focus on tax relief for media companies disregards the established creative economy model in which the creative output of some sectors drives innovation and growth in others.vii

5. Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this. Work-readiness (university graduates) Craft makers are a highly qualiﬁed group: just over 60% have a bachelors’ or post-graduate degree in craft, art or design. Our research shows that the majority of graduates from undergraduate craft degree courses value their education in terms that relate to both their creative development and their capacity to run a business. These graduates value opportunities to learn in a real industry setting, through placements and through taking part in exhibitions and shows. They feel equipped as independent, self-motivated project managers, juggling multiple priorities. Research shows that craft Higher Education produces highly entrepreneurial graduates, and as such is meeting BIS’s calls for graduates to overcome a “big ﬁrm mentality” and move towards entrepreneurship. Our overall contention is that the priority for undergraduate students should be on developing an innovative practice that is aware of—and responsive to—relevant commercial social and cultural frameworks. Business awareness should be part of this process, but not to the exclusion of core creative and craft capabilities. The study of craft at degree level is at risk within the current changes in Higher Education. Like other creative arts subjects, craft is typically hosted by the post 1992 universities/former polytechnics known as the Million+ group making the success of this group vital to continued innovation and development in the sector. These HEIs attract neither substantial research funding nor the levels of academically high-achieving students whose numbers are uncapped by Government and have in many cases been adversely affected by policy developments on “core and margin” student recruitment policies, yet they can often produce the most creative graduates. We would recommend that BIS recognises the threat posed to the creative industries by erosion of teaching within the Million+ group of universities, and takes steps to safeguard their future in its allocation and guidance to the Higher Education Funding Council for England (HEFCE).

Work readiness (school leavers) Teaching in schools is an important driver for take-up at HE and ultimately for professional practice. The Crafts Council believes that at present schools-based education does not adequately equip young people with the requisite understanding and skills for a career in the creative industries in general and craft in particular. We are concerned that recent education initiatives including the framework of the National Curriculum Review; the introduction of the E-Bacc; recommendations in the Wolf Review and declining numbers of arts teacher training places in 2011–12, threaten the provision of practical and cultural education in schools. Whilst we believe that all young people must be proﬁcient in literacy and numeracy, they also require a broad range of opportunities to discover where their abilities may lead them to excel. Such craft skills may also contribute towards the growth of other sectors beyond craft. The Crafts Council believes that practical skills, including craft skills, should form an integral part of the National Curriculum to Key Stage 3 as part of a cultural offer in the curriculum. Whilst we do not advocate compulsory craft teaching at Key Stage 4; when craft is taught at this level it should be as an independent subject accompanied by a recognised Programme of Study to provide proper guidance to schools.

Apprenticeships The issue for craft apprenticeships, in particular, is currently more about supply than demand. A sector composed of sole traders and micro-businesses does not have the capacity or resources to host apprenticeships and interns under current schemes. This is often due to space and time, rather than lack of ability to train or share knowledge. Most makers desire some form of assistance but are unable to afford the salary contributions to apprenticeships, and are deterred by the formal commitments to training under the scheme. As an alternative to sit alongside apprenticeships, we recommend building on the unaccredited work placements common in the craft sector—particularly post-degree. The formalisation of work placements would provide structure and recognition for existing training. This type of skills system should prioritise gaining tangible skills over accreditation. The accreditation of qualiﬁcations through NVQs, for example, has been too focussed on gathering evidence of competencies rather than gaining relevant skills. Also, many current schemes overlook the fact that entry into craft is often a second career and, by capping the joining age, exclude people wishing to bring manufacturing or service skills into the sector. At the same time, we would wish to see greater ﬂexibility and capacity for transfer between apprenticeships and academic cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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routes, thus increasing the opportunities to develop skills. Addressing this would increase the diversity of skills in the sector.

Continuing Professional Development (CPD) Like other creative professionals, craft makers are lifelong learners and continue to develop professional and technical skills throughout their careers. However, they rarely allocate budget to CPD; relying instead on skills swaps, grants, awards and highly subsidised offers.viii This tends to make CPD provision unsustainable, and means that makers are often reactive and opportunistic in their take up, undertaking inappropriate courses purely because they are available. Partly as a result, makers at all career stages report a need to develop additional business skills—47% feel they need to develop new skills in this area, with 25% specifying a need for training in marketing (including web design) and 6% in book keeping or accountancy.ix This is particularly significant, given that nearly 90% of makers meet all their business administration needs themselves, and that less than a third receive any business skills training whilst running their businesses. Our view is that specific, timely and appropriate forms of CPD are crucial to the business and creative growth of the micro-enterprises prevalent across the creative industries. It is a concern that cuts to public expenditure and additional calls on philanthropy mean that these opportunities are currently contracting. The work involved in enabling craft makers to develop capacity to collaborate and export, both online and offline, is intensive, expensive and important. The government is creating opportunities to fund it—through NESTA, the Research Councils and the Technology Strategy Board, as well as through business growth incentives administered by BIS. However, our experience shows that these schemes and incentives will succeed in the craft sector only when brokered by business representative bodies. Craft businesses themselves, as outlined above, are not only under-connected to business information sources, but also often lack the time or skills to assess the relevance of tax breaks, employment incentives and loan schemes to their business. Schemes such as the ACE Creative Industry Finance initiative—supported by the Crafts Council as a promotional partner—are appropriate models for engaging these businesses with business development tools and skills.

6. The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication Makers in England are located across the country, with many small clusters and larger discernable hubs in London, East Anglia and Cornwall, and there is no central Government funding for business-focused geographical clusters or hubs in craft. We recommend prioritising effective universal communication over such investment, because craft is too small and diverse for geographical clustering to be effective. We would instead prioritise high speed broadband connectivity throughout the craft sector, including for businesses in remote areas. The Crafts Council has recently become a steering group member of The University of the West of England’s AHRC hub, Research and Enterprise in Arts and Creative Technologies (REACT). Based at the Pervasive Media Studio at Watershed in Bristol, REACT works with the HEIs of Bristol, Exeter, Bath and Cardiff as well as the Watershed Media Centre and a range of other creative industry partners. This type of research hub is a new initiative, and we would recommend that the AHRC reports to BIS on its overall effectiveness, following the four year initial funding period.

7. The work of the Creative Industries Council (CIC) and other public bodies responsible for supporting the sector The CIC We agree with Vince Cable’s assessment that—after 18 months of operation—now is an appropriate time to consider the CIC’s future development. We agree with Mr Cable that the CIC has undertaken some good work, but feel that it is limited by its focus on particular creative industry sectors, namely ﬁlm, music, television, design and games. We, like the Work Foundation,x would argue that less commercially hard-hitting creative industries sectors also play a vital role in the creative economy, sustaining entrepreneurship, supplying other creative sectors with materials and ideas (or “expressive value”), and promoting UK plc. Currently, only one of the CIC’s 35 members (Arts Council England) represents the arts. Creative Skillset (the sector skills council for the media and fashion industries) was invited to join the group this year; Creative & Cultural Skills (the SSC for craft, design, music, performing and visual arts, cultural heritage and literature) was not. We recommend refocusing the CIC’s membership, to enable the whole sector to join up and collaborate on meeting policy goals. Speciﬁcally, we suggest working with Arts Council England to identify and appoint representatives of the missing creative industries sectors to the Council. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Other public bodies The contemporary craft sector is represented at a local level by various maker-led guilds and other member organisations, many dating back to the 1920s and focused on a particular county or material. These organisations are typically unconnected with each other, or with broader policy agendas, and operate idiosyncratic membership selection policies. In addition, a small number of regional organisations—such as Craftspace in the West Midlands and Designed and Made in the North East—work in a more ambitious and strategic way, delivering regional sector support and education programmes. The Crafts Council itself has developed substantial reach across the craft business community over a 40 year period since its inception in 1972. Crafts Council’s COLLECTIVE programme, launched in 2009, offers makers choice and control about undertaking Continued Professional Development (CPD). The programme includes different types of support, all of which can be tailored within a structured framework and provide a strong emphasis on reﬂective learning and peer support. The programme includes: — Hothouse, support for emerging makers, (within two years of setting up a craft practice) now entering its third intake. The scheme operates nationally working with partners including Higher Education Institutions (University of Hertfordshire/Liverpool Hope University/Plymouth University); galleries & retailers (Bluecoat Display Centre/Smiths Row); Studio groups & specialist support agencies (Yorkshire Artspace/Benchpeg). Applications have increased incrementally over the last three years in response to greater awareness, positive advocates in past participants and greater reach across the country. — Portfolio, which provides opportunities for makers seeking to use their craft skills and material knowledge in collaboration with other sectors including, to date, focus on education, architecture and currently Internet of Things. — Injection, which provides intensive business support to encourage and enable growth for makers who have already developed an established practice, but who are seeking particular assistance with an identiﬁed area of growth. This is being piloted this year (2012) in connection with Creative Industry Finance. In addition, the Crafts Council’s e-newsletter reaches 25,000 people each month, many of whom are makers. Its social media presence connects it with 25,000 Twitter followers and 7,000 Facebook fans (as of October 2012). Through these communication routes, the Crafts Council ensures that craft businesses hear about new policy initiatives and government initiatives, that the relevance of these initiatives is made clear, and that ambition to take part is raised.

Conclusion At a time when the creative industries in all their guises have contributed to an incredibly successful Olympic and Paralympic Games it is lamentable that Government policies seem to be working against the growth in development of the creative industries through the promotion of the E-Bacc and higher education funding policies. The creative industries have been a driving force for growth over the last two decades, but Government’s understanding and appreciation of the creative industries has faltered when under pressure. The creative industries provide and can continue to provide employment and economic growth for the UK.

References i Burns Owen Partnership (2012): Craft in an Age of Change. London, Crafts Council. ii Morris Hargreaves McIntyre (2010): Crafting Capital. London, Crafts Council. iii Burrows, H and Ussher, K (2011): Risky Business. London, Demos. iv Cockpit Arts (2010): The Cockpit Effect 2011. London, Cockpit Arts. v Morris Hargreaves McIntyre (2010): Crafting Capital. London, Crafts Council. vi Burns Owen Partnership (2012): Craft in an Age of Change. London, Crafts Council. vii Work Foundation (2007): Staying Ahead: the Economic Performance of the UK’s Creative Industries. London, Work Foundation. viii Creative & Cultural Skills (2009): The Craft Blueprint: a Workforce Development Plan for the UK. London, Creative & Cultural Skills. ix Burns Owen Partnership (2012): Craft in an Age of Change. London, Crafts Council. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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x Work Foundation (2007): Staying Ahead: the Economic Performance of the UK’s Creative Industries. London, Work Foundation. November 2012

Written evidence submitted by The Society of Authors Introduction The Society of Authors exists to protect the rights and further the interests of authors. The Society was founded in 1884 and today has over 9,000 members writing in all areas of the profession (from novelists to doctors, textbook writers to ghost writers, broadcasters to academics, illustrators to translators). Authors are eligible to join if they have been offered a contract from an independent publisher, broadcaster or agent or have sold over 300 copies of a self- published book. The members of our council are listed at www.societyofauthors.org/about-us/council. Most of our members are self-employed. They own copyright in their work and depend for a signiﬁcant proportion of their income on equitable remuneration from licensing the use of that work. The Society is a member of the Creators’ Rights Alliance. We have read their response and agree with it and adopt it in full. Therefore in this response we will conﬁne ourselves to a few issues which are of particular concern to authors.

Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector The largest barrier to growth for most authors is the difficulty of obtaining a proper return for their professional work. Authors’ incomes continue to be squeezed: fewer books are published and sold; advances have fallen while more unpaid work is expected of authors in marketing and publicising their work, including appearances and use of social media. In a survey in 2006, ALCS concluded that writing is a very risky profession with median earnings of around £12,000 for “professional” authors and around £4,000 for all authors, less than one quarter of the typical wage of a UK employee. Benchmarking the results against the Society’s survey, reported in 2000, indicated that the earnings of a typical author were deteriorating in real terms. This trend is continuing. Authors need to earn reasonable amounts from the considerable effort put into writing in order to continue producing inspiring and informative books (in whatever format) in all genres. Access to finance is not typically a major issue, although the decrease in advances means that many authors find it hard to obtain funding during the sometimes considerable period needed to research and write a book. Authors can also be deterred by sometimes onerous contracts imposed by publishers and other intermediaries so that they cannot receive an equitable return for their work.

2. Term of Protection We are concerned at the recommendation in clause 67 which gives the government power by means of Regulations to reduce or end the term of protection which currently applies for works which are unpublished and which were written before the provisions of the Copyright Designs and Patents Act 1988 (CDPA 1988) came into force (effectively this means unpublished works in existence in 1989) and works which have been published and were in existence before the CDPA 1988 came into force and are of unknown authorship because their author chose to be published under a pseudonym or anonymously and their identities cannot be ascertained by reasonable inquiry. The power may be exercised so as to bring the term of copyright in the works affected to an end on the commencement of the regulations or at any later time. The operation of such Regulations could deprive cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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rightsholders of their vested proprietary interests without compensation and without compensatory beneﬁt to the UK economy and would be contrary to the United Kingdom’s international treaty obligations under the Berne Convention, under TRIPS, and under the EU Term Directive. Although the Explanatory Notes give the impression that the Clause is intended to facilitate the digitisation and communication to the public of medieval manuscripts and other very old material held by cultural institutions it is of wider application and is capable of affecting works of relatively recent origin whose rightsowners are easily located, for example, Ford Madox Ford, the author of the novel sequence Parade’s End which was recently broadcast by the died in 1939. Consequently, all his published work has been in the public domain since the beginning of 2010. Any unpublished work (correspondence, diaries, drafts) is protected under current UK law for a further 25 years from 2013.

3. Extended collective licensing The Society is extremely concerned by the proposal in the ERR Bill enabling “extended collective licensing” to be introduced by Regulation (in the clause currently numbered 68). As the Creators’ Rights Alliance said in response to the government consultation post-Hargreaves: there is no point in legislating for proper remuneration through extended collective licensing, or for exceptions to copyright bearing a right of remuneration, if publishers can then inform creators that they must sign over all such income. Steps to level the playing field in negotiations between individual authors and publishers are required: at a minimum, an equitable share of income from new streams such as extended collective licensing must be an unwaivable right of the individual creator. Such an unwaivable right already exists in UK copyright law in the implementation of the EU Rental and Lending Directive. We agree with the CRA’s preconditions for the acceptability of extended collective licensing: — Enforceable unwaivable moral rights for all creators, including an enforceable prohibition on removing metadata, are brought in at the same time; — Only collecting societies democratically controlled by creators in the field may issue either kind of licence; — Said collecting societies’ handling of applications for such licences shall be subject to government regulation; — Licences are for a fee reflecting the market rate; and — Unclaimed monies should be applied to the benefit of authors as a whole, eg for training and education.

4. Orphan works The other proposed Regulations to be authorised by Clause 68, to introduce schemes for the licensing of “orphan works”, raise many of the same questions. While we welcome the assurances that ofﬁcials have given in meetings of the Intellectual Property Ofﬁce Working Group on ECL and orphan works, that the goal of any changes must be to avoid distorting the markets for works by known authors, further safeguards are necessary including measures to prevent future works being “orphaned” by introducing effective deterrents against removing identifying metadata.

Digital Economy Act Public Lending Right (“PLR”) The Rental and Lending Directive (2006–115/EC which replaces the repealed 92/100/EEC) creates a “rental and lending right” under which authors have the exclusive right, subject to limitations, to authorise or prohibit the rental or lending of their works [Art. 2(1)]. The rental and lending right may be transferred. However, even once the rental and lending right is transferred, the author or performer retains an inalienable and unwaivable right to equitable compensation for the rental and lending of their works. The PLR scheme provides authors with a modest payment each time one of their books is borrowed from a public library. PLR is designed to balance the social need for free public access to books against an author’s right to be remunerated for the use of their work. PLR is particularly important to authors whose books are sold mainly to libraries and to those whose books are no longer in print but are still being read. Press coverage tends to focus on a few successful authors, yet most struggle to make ends meet. PLR provides a signiﬁcant and much-valued part of authors’ incomes. S 43 of the Digital Economy Act 2010 extends PLR to audiobooks and ebooks “lent out” from library premises for a limited time but these payments have never been implemented. This is patently unjust and we urge that this provision be brought into force and that extra funds be made available to cover PLR payments for such lending. We have been in long correspondence with DCMS on this subject and in relation to lending from volunteer libraries (which are likewise excluded from PLR). The amendments in section 43 of in the Digital Economy Act 2010 only extend PLR to audiobook and ebook ﬁles downloaded within the library premises, as downloading from outside library premises may constitute “communication to the public” rather than “lending”. We urge you to recommend the Government to implement s43 without further delay and, if remote ebook lending from libraries is to be authorised, to ensure equitable cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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remuneration to authors in relation to the resulting “communication to the public.” The failure to implement these payments is a clear breach of the Rental and Lending Directive

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this See our observations on authors’ diminishing incomes, above. Authors come from diverse backgrounds of skills and experience and there is no particular training which can support an author in his or her career. However authors and all other creators would benefit enormously from an educational and general environment from primary level upwards, which emphasises the value of culture and the importance of copyright. IP rights are enormously important and lucrative to the UK economy. It is important to create an environment in which they are encouraged and can flourish. The National Curriculum should include, perhaps within the citizenship modules, instilling in children an understanding of the value (artistic and commercial) of intellectual property rights. Knowing that they own copyright in what they have written, and what that means, can be a cause of excitement and pride in students; it increases a sympathetic awareness of value, and an understanding of the harm done by piracy. School libraries should be compulsory and reading and writing for pleasure should be encouraged. Beyond Key Stage 3, the English Baccalaureate (EBacc) league table was introduced by Michael Gove, Secretary of State for Education in 2010, with a certificate and new exam proposals being announced in September 2012. The EBacc focuses on five subject areas: Maths, English, Sciences, Languages (Ancient and Modern), and Humanities (defined as only History or Geography). It does not include creative subjects. The omission of rigorous creative subjects (and consequently education about intellectual property) should be reversed through the introduction of a sixth pillar of creative subjects. This was suggested in the independent review of Cultural Education authored by Darren Henley, on behalf of DCMS. High street bookshops, local theatres, libraries all underline the importance of books, culture and learning and should be supported. .The habit of culture should be as much a fundamental aspect of the environment as is, for example, the country’s architectural heritage. We hope that these points are helpful. We would be happy to provide any further information which may be useful, and to provide oral evidence to the review. November 2012

Written evidence submitted by the Independent Film & Television Alliance (IFTA) IFTA welcomes the opportunity to participate in this important parliamentary inquiry over the UK’s creative economy. In recent years, IFTA’s member companies have been associated with many high-profile British productions, including Slumdog Millionnaire, The King’s Speech, A Single Man and The Iron Lady (see case study on this film on page 2 of this paper).The British film industry is a prime example of the UK successfully punching above its weight as a creative economy, through the effort of entrepreneurial SMEs which—more than ever—need appropriate regulation and incentives in order to remain sustainable and fully exploit the emergent opportunities in the digital economy. In this response, we have chosen to concentrate on only one set of issues in the list published by the committee, namely the role of copyright in supporting growth in the UK’s creative sectors. We are referring specifically to the wording laid out in the Committee’s Call For evidence, posted on the www.parliament.co.uk website: “The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament);” IFTA’s international membership dictates that we focus primarily on those aspects of national consultations which directly impact the capacity of our member companies to raise finance internationally and export films to foreign markets. The UK film industry successfully exports its productions to many countries around the world, where many have been released to critical acclaim and commercial success. We believe sound and robust copyright is the lifeblood of our industry throughout the world and that the UK possesses—through its current copyright law and enforcement structure—a prime competitive asset in incentivizing creative enterprise and attracting global inward investment into its filmed entertainment and other high-value creative goods.

1. Copyright Sustains the Economic Value of UK Film Creativity IFTA’s membership is comprised of independent film production and distribution companies based in the UK, the United States and the rest of the world. The term “independent” generally describes film producers and distributors that finance, produce and distribute outside of the six major Hollywood film studios. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Economists describe film production as a high-risk product, characterized by a lack of standardization, very high upfront costs and marketing costs and little price flexibility. The typical major studio economic model mitigates such high risk through concentration and integration, both vertical and horizontal. A studio is in a position to finance 100% of production and marketing costs on a new film because it is also able to acquire all rights in the film and control its worldwide distribution directly, through international subsidiaries. In other words, studios take all the risk and control all of the economic upside from the exploitation of rights through their U.S. and international distribution units.

Although major Hollywood studio ﬁlms have a dominant market share in many national markets worldwide, this economic model is the exception rather that the rule for producers. The independent production, ﬁnance and distribution model is the predominant one, be it in the UK or the rest of Europe. In the independent model, companies are small to medium sized enterprises on a far smaller scale than major U.S. studios. Their access to capital is generally more restricted and most do not directly own or control distribution either nationally or internationally.

In order to adapt to such market parameters, independent film producers finance film projects largely through pre-selling exclusive rights to a film while it is still at script stage or in pre-production. Those rights are pre- sold most of the time on an exclusive basis to a single distributor in a given country. The value of the pre-sale contract may be collateralized by a bank, thus allowing the producer to finance the project itself, before the film is produced. In turn, the confidence shown in the project as evidenced by presales of distribution rights also serves to attract equity investors who take reassurance in knowing that the film will be exploited by distributors who have taken a risk position on the project.

Copyright and the ability to control the exclusive rights related to copyright constitute an asset that is monetized and commercialized, thereby enabling the funding of ﬁlm production costs and the authorized distribution of completed ﬁlms.

In order to further illustrate this point, a detailed case study follows—the film, The Iron Lady, was developed and financed by Pathé, an IFTA member based in the UK, using rights-based transactions as its main business strategy. The Iron Lady—a case study A winner of two 2012 Academy Awards, and a box office success with over $124 million worldwide, The Iron Lady represented a substantial creative and financial risk for its majority backer, the European film company Pathé. This original story was a stylised biographical take on the character of Margaret Thatcher, the most influential British politician of her generation. Whereas the median budget for a national European film is around £3.5 million, The Iron Lady was in a far more ambitious—and riskier—bracket at 11.75 million. A key factor in raising a budget of this level was the cast. The producers knew from the inception of the project that they needed both a star and an actress of uncommon skill and ability to portray Lady Thatcher. From their perspective, Meryl Streep was the only actor who met both criteria and who would therefore enable them to raise the necessary funds from pre-selling the film to international distributors (see below). Although a company of some standing in the European market, with consolidation in both France and the UK, Pathé could not afford to take 100% of the financial risk on The Iron Lady’s budget. Unlike the Hollywood studios, which can call on vast resources and control the distribution of their films in the global marketplace through wholly-owned distribution subsidiaries, European film companies can only very rarely afford to fully finance a film off their own cash reserves. In this case, Pathé partnered with Channel 4, the British Film Institute, and a UK tax equity investor, Goldcrest. Pathé still had to put up £5.15 million, almost 45% of the budget (60% of the equity invested in the film), which Pathé would then recoup pro rata and pari passu with its fellow equity investors out of revenues from the worldwide exploitation of the rights excluding only UK terrestrial TV rights. Of course Pathé could not start production on the film with that level of risk investment unless absolutely confident that its valuation of the international rights in the film was accurate enough. Pathé therefore presented the packaged film to the international market. The intention was to pre- sell the project to film distributors in key territories around the globe, or at least establish their appetite for the film… The pre-sale of the exclusive rights illustrates how strategic rights derived from copyright can be used as a powerful incentive and stimulant to financing new films: How rights make films happen—the pre-sale explained The pre-sale of a film project consists of a producer (or its appointed sales agent) persuading a distributor in a specific country to take a risk by committing to buy exclusive distribution rights in a film in its territory, before seeing the completed film (. a decision based on reading the script and knowing the director, cast and budget). The distributor will agree to pay a fixed amount—a minimum guarantee of royalties—on delivery of the completed film in return for exclusive distribution rights in its own territory. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The producer is then able to present the distribution contract to its bank which will cashflow (after discounting) the promised payment against the collateral of the distributor’s undertaking to pay, and the cash made available is then used to finance the film’s production budget. During the Toronto International Film Festival in September 2010, Pathé was able to sign a significant number of pre-sale deals (totalling approximately £4 million) based on the script, director and cast for The Iron Lady. The timing of Pathé’s decision to take the project into production was coordinated to ensure that they had market feedback from film buyers in Toronto before committing to heavy pre-production expenditure in September (production as such was not scheduled to start until February 2011). This typifies business practice in independent cinema: major international film markets, (eg the American Film Market [AFM] owned and operated by IFTA, the European Film Market, or the Marche du Film in Cannes) are routinely attended by professional producers offering their films, international sales agents, and national film distributors buying and selling films. Of course the strong Toronto sales performance did not mean that the film was then risk free. The major territories of North America and Japan remained unsold (and if they remained unsold the investors would lose money). However it did mean that Pathe was willing to take that risk with a view to shooting the film, creating promotional materials and then screening the film to those buyers from the territories for which the exclusive rights remained unlicensed, at the Marche du Film in Cannes eight months later (May 2011). That strategy worked and the remaining territories were all sold in Cannes. However, it should be noted that most production companies are insufficiently resourced to carry the quantum of risk Pathé was willing to carry into principal photography (roughly £2.5 million). An independent film company with more modest resources than Pathé—which is the majority of film companies in Europe—may have had to put the project on standby or write it off altogether (ie taking a loss on all the development costs incurred to date), because it would not have been in a position to go ahead and produce the film with such a significant risk exposure. The film’s star, Meryl Streep, would not have been able to wait till that risk had been fully laid off, owing to her many other commitments. Pathé itself took a calculated risk, banking on the prestige of the project and the tour de force performance they expected from Meryl Streep, to generate enough pre-sales to eventually cover itself financially. Every step of the way in the story of how The Iron Lady came to be made, we see how film producers used the rights derived from copyright strategically in order to transform a story and a creative vision into what eventually became an award-winning and commercially successful film.

2. The UK Copyright Review—Copyright as a Driver For Innovation Over the past three years, IFTA has participated in successive Government consultations on the UK copyright framework. The Hargreaves review was a cause for concern for our industry as it appeared to have been built on the ideological preconception that copyright had become an obstacle to innovation and growth in the nascent online economy. Based on the detailed empirical evidence we are able to collect from our Member companies on the front line of the rights licensing economy, there is no significant corroboration for this conception of copyright as a barrier to digital business expansion. Of all the reasons why Internet start-ups may struggle to launch and/or survive in a cut-throat marketplace, allegedly onerous content or overly complex licensing requirements are seldom strategic. It would be neither fair nor effective to bring about new regulatory constraints on rights holders—or further limit exclusive rights so as to subsidize another sector of the economy, such as Internet start-ups. IFTA believes that solutions to accessing content for online businesses lie in the market itself. And this market is changing at an unprecedented pace. Far from stifling innovation in the UK content marketplace, it appears strong copyright legislation has acted as a clear stimulant. In today’s online distribution of films, the UK has close on 50 different platforms and portals. These new players run the whole gamut of business models and technologies, from subscription VoD (LoveFilm, Sky), to individual downloads based on secure payments (iTunes, Sony) and advertising-supported platforms (Blinkbox). The only clearly identifiable blockages in this nascent economy are not due to opaque licensing practices, but more simply to instances when rights holders and platforms find it difficult to agree on the terms of a license, including a price for the sought-after content. But the resolution of these tensions are typical of a new technology marketplace and should be left to market-driven negotiations. This tension in the supply and demand equation is present in other segments of the economy and the fact that some licensees find paying for content onerous and find the transaction costs high, do not make them objectively so. As economic value from the exploitation of exclusive rights in film continues to migrate from packaged video (DVD/Blu Ray) towards the online VoD platforms, it is anticipated that meaningful revenues will be generated from these new forms of exploitation, that these revenues will become “bankable” in the context of pre-production financing and that the new online platforms will contribute effectively to defraying the considerable sunk costs (development, production and marketing) of a film’s manufacturing cycle—and that cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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professional film production will remain sustainable. Thus, IFTA believes more time is needed for the marketplace to adapt and find its own solutions before considering any substantive change to UK law or regulation. Changing the regulatory parameters while this epochal transition is in process would risk throwing a vulnerable economic sector out of balance without bringing discernible benefits elsewhere.

2.1 UK Copyright Hub IFTA has welcomed the outcome of Richard Hooper’s feasibility work on the creation of a UK Copyright Hub. We support the principle that this practical project be deployed on an opt-in, non-exclusive and pro- competitive basis. Above all, it is important that this initiative should steer clear of interposing itself between rights holders and platforms other than in cases where both sides would voluntarily choose to use the Hub as an intermediary under clearly defined terms. Although we are supportive, IFTA is aware of the fact that the type of licensing that the hub will hopefully facilitate will be of limited application to the independent film sector, due to the nature of the audiovisual product: copyrights and other underlying rights in each film generally end up under the direct control of the film’s producer or its assignees, thereby facilitating licensing of the content to distributors, broadcasters, online platforms, etc. This structure has served the sector well in the analogue era and it appears to be just as functional in the context of emergent digital platforms. We note also that one of the intended uses of the Copyright Hub will be to serve the needs of libraries and archives. While IFTA supports the general principle, owing to the role of these institutions in serving the public interest, we note that our industry has had a long standing tradition of establishing voluntary agreements with film libraries and archives, with mutually agreeable dispositions to deal with issues such as digitisation, uses for research and study and inter-library loans. We believe the Hub should be designed with due flexibility so as not to disrupt or contradict such agreements where they exist.

2.2 Exceptions and limitations to copyright IFTA is extremely concerned that the focus of UK copyright review, since the publication of the Hargreaves Report, appears to be primarily on introducing new exceptions and limitations to copyright. We are troubled in particular with plans for a broad-based private copy exception which appears to be based on the assumption that the attendant loss of revenues for rightsholders would not require the introduction of any kind of compensatory remuneration scheme as pricing in the marketplace would naturally adjust. We strongly dispute this analysis and urge this Committee to raise the issue with Government and the Copyright Office. We welcome clause 57 of the Enterprise and Regulatory Reform Bill, which should ensure that new exceptions to be potentially introduced in UK’s CDPA must be within the boundaries defined in the EU copyright directive. However, we support the general call of our colleagues in UK film and related creative industries to oppose the notion that the introduction of new exceptions and limitations in UK law should be dealt with as a single package, within a single Statutory Order. The three-steps-test of the Berne Convention, which is also embedded in the EU Copyright directive, suggests that each new exception or limitation to copyright should be considered in its own right, especially with regard to its potential impact on the normal exploitation of a work and possible economic prejudice to rights holders, not as part of a package of other exceptions or limitations.

3. The need to Tackle Online Piracy The audiovisual value chain is being transformed at a rapid pace by the transition to a digital paradigm of content on demand anywhere, at any time and on any device. As the main revenue proposition continues its slow shift away from the physical medium as a dominant form of film distribution and migrates to digital online platforms, it is essential that every effort be deployed by the UK creative industries and by Government to combat online piracy. Failure to do so could result in the long run in one of the UK’s proudest creative sectors, its film and TV industry, beginning to fail as revenues evaporate. Online piracy undermines the promises of a sustainable online content economy and is deeply corrosive of film companies’ efforts in developing new business models. Independent UK film distributor Momentum Pictures monitored peer-to-peer networks prior to the release in UK cinemas of the critically-acclaimed film The Fighter. The monitoring company detected 215,000 attempts to view the film online in less than a month. In a not so distant future, when the majority will consume films online, cyber piracy left unchecked will wreak havoc with the fundamental financing models for independent film. The UK’s film industry is made up overwhelmingly of dynamic SMEs and it is difficult to see how the majority would continue to have a sustainable future if illegal uses of content continue to proliferate unchallenged in the online space. As an active member of the UK’s Creative Coalition Campaign, IFTA was involved from the outset in the advocacy of measures to curb peer-to-peer piracy which were incorporated into the 2010 Digital Economy Act. We continue to support Government in its process of implementing the relevant provisions of DEA and deploying a notice-sending mechanism which we believe will raise public awareness of the deleterious effects of piracy and encourage infringing consumers to use legal services, as it has in other countries where the measure was introduced. After the long delay resulting from the judicial review, we support Government and Ofcom in their efforts to ensure a swift implementation of the notice-sending measure. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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However, as a trade association representing small and medium-sized rights holders, we are very concerned that the costs of notice sending will be prohibitive for many of the SMEs we represent and will effectively discourage them from filing copyright infringement notices. The success and credibility of the notice-sending measure will depend on its ability to represent the widest possible cross-sections of works from the widest possible cross-section of rights holders. Piracy’s impact on copyright works made by SMEs is devastating, owing to the more vulnerable and “upfront” nature of the economic model for independent film. IFTA therefore urges the DCMS Committee to engage Government and Ofcom on this important issue, so that the costs of participation are not such as to discourage those rights holders which are most representative of UK creativity and creative enterprise. Finally, it is a matter of consensus that although a legislative measure aimed at illegal peer-to-peer exchanges will be enormously helpful in raising consumer awareness over online infringement and encouraging legal uses, it will not be sufficient in tackling the various forms of illegal usage which prevail today. In this respect, IFTA welcomes the efforts deployed by DCMS in coming to grips with the issue of pirate websites offering downloads of infringing content and in looking at playing a more prominent role in bringing about the active participation of UK ISPs in the fight against online piracy. Precedents established in UK courts in the past year, over article 97(a) of the CDPA (implementing Article 8(3) of the EU Copyright directive), have been extremely helpful in clarifying the legal parameters under which a rights-holder may apply an injunction on an ISP whose service is being used by infringing websites. These court decisions have laid the ground for what should become an expedited process enabling a less onerous and more effective process to deactivate infringing websites in future.

Conclusions—Key Points IFTA’s members are active in the British film industry in both financing and international distribution. As partners of this successful yet vulnerable creative sector which has done so much to disseminate the British brand overseas, we believe UK copyright law is balanced and fair, ensuring the public interest is served whilst also offering creative enterprise a high level of intellectual property protection. As such, current UK copyright law and enforcement contribute substantially to the competitiveness of the national economy in attracting the hefty investments necessary to develop, produce and distribute quality filmed entertainment. — FTA is concerned with current Government plans to introduce new exceptions and limitations copyright based largely on the biased conclusions and recommendations of the Hargreaves review of copyright. We believe the marketplace for UK creative rights in the digital environment needs time to evolve its own business-based solutions; — IFTA notes with satisfaction that Clause 57 of the Enterprise and Regulatory Reform Bill, guarantees in principle that any new exceptions to be potentially introduced in UK’s CDPA must be introduced in full compliance the EU copyright directive. We are opposed to the exceptions under consideration being introduced to the Houses as an all-encompassing single Statutory Order; — IFTA calls on the UK Government to implement the notice-sending measure codified in the Digital Economy Act without further delay. We believe that notice-sending will be effective in raising public awareness of piracy and encourage consumers to make use of the ever increasing array of legitimate online audiovisual content services; and — IFTA believes online piracy will not yield to a single legislative measure. Specific action continues to be required to take down websites in the business of offering content obtained illegally, a fast growing and especially elusive source of film piracy. We commend the Government for its consistent efforts in encouraging the involvement of UK ISPs in the fight against piracy and express the hope that it will continue to facilitate cooperation between ISPs and rights holders in future.

About IFTA The Independent Film and Television Alliance is a non-profit trade association based in Los Angeles, California. IFTA represents the economic interests of over 150 companies from 23 countries, the majority of which are independent producers and exporters of feature films and television programmes. IFTA has 22 member companies in the UK, all of which are active in film production, sales and/or distribution. IFTA members produce about 400 feature films annually and countless hours of TV programming and this content is increasingly to be found on emergent online platforms in the United States, the UK and the rest of the world. IFTA regularly provides input to governments around the world on a wide range of copyright, trademark, financing and export issues that impact the independent industry. IFTA also produces the American Film Market® (AFM®) each year in Santa Monica, California, where more than 8,000 industry leaders and participants from over 70 countries come together to carry out worldwide film and television production and distribution deal-making. Over $800 million in production and licensing deals are closed each year at AFM. The AFM provides a birds-eye view into the economic interactions that underpin the independent financing and worldwide distribution of audio-visual product and the importance of the global copyright framework which supports this dynamic trade. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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In the UK, IFTA is an member of the Creative Coalition Campaign (CCC). As a pivotal market for independent audio-visual content worldwide, the UK is home to some of the most economically and creatively active member companies of IFTA. Over the years, they have been involved in a number of British Oscar®- winning films, including Gandhi, Chariots of Fire and Slumdog Millionaire, and helped to launch the international careers of these films. Recent productions to which IFTA’s members have been associated also include British critical and commercial successes such as Brideshead Revisited, The Queen, Happy Go Lucky, and Pride And Prejudice and the current mega-hit The King’s Speech, the winner of 4 Academy Awards® this year, including Best Picture®. As the trade association for independent film companies operating on a global basis, IFTA boasts a breadth and depth of experience in measuring the positive impact of intellectual property law on the development of this vital segment of the audio-visual sector: independent film companies assume the majority of the financial risk for the production of a film or television program and control its distribution in a majority of territories worldwide. They are therefore entirely reliant on a coherent global framework for copyright and licensing, as well a robust enforcement, in order to raise finance to make the films and ensure their widest possible outreach to the consumers. November 2012

Written evidence submitted by Workspace Summary — Workspace is a FTSE 250 Plc providing accommodation and support for around 4,000 SMEs, including around 1,500 creatives, across London. — Access to ﬁnance remains a signiﬁcant factor in the growth of SMEs, it is not, however, the only factor. — Issues such as Empty Rates have a largely unrecognized impact on the growth of SMEs and creatives through the knock-on impact from landlord costs limiting the supply of suitable space. — Clusters and hubs can be incredibly important aspects of the growth of the creative sector. Where appropriate, this should be nurtured. However, there is a risk of an excessive focus on hub creation being counter-productive as businesses prefer an individual to corporate identity.

About Workspace Workspace, a FTSE 250 Plc, is the leading provider of space for SMEs across London with around 30,000 employees and 4,000 businesses in 100 business centres across the capital. Approximately a third of our customers are creatives including many well-known brands such as Moonpig, A Suit that Fits, and Rococo Chocolate. In 2011 we launched Club Workspace, a new concept in ﬂexible working supporting entrepreneurs from spare room to boardroom. With three centres currently at Clerkenwell Workshops, the Leathermarket and Kennington Park, 2012 will see up to three more Club Workspace centres rolled out. We create unique environments that enable new and growing businesses to have the freedom and opportunity to thrive. Our customers are at the heart of London’s real economy and we provide them with the right space and services to help them grow. The ﬂexibility of our leases and IT contracts equips our many small businesses with the tools to expand and contract, making business planning more certain. Being a Workspace customer means being part of a community of over 4,000 ambitious businesses in over 100 London locations.

Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector In 2010, Workspace commissioned a study from the Kingston Small Business Research Unit looking at factors affecting growth in SMEs. This focused on the adjustment strategies used by a sample of small firms in response to recessionary pressures, together with the effects on post-recession performance. SMEs adapted to the recession in a wide variety of ways: some implementing practices aimed at cutting costs; others focusing on generating revenue; while others sought to combine the two types of action. One of the starting points for the study was to investigate how small businesses have managed the transition to recovery. The type and number of practices introduced vary by organisational characteristics such as the level of performance achieved and by size of enterprise. Moreover, findings suggest that larger enterprises were more likely to take actions that would generate income in 2010 than they did in 2008–09. In terms of financing, more than half of the survey sample reported using some form of external finance in the financial year ending in 2010, mainly for working capital. However, the use of external finance during this period was not systematically related to firms with a particular level of performance. The majority of firms cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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applying for external finance were able to obtain either all or some of it. Bank overdrafts and business credit cards were the most commonly sources. Some of the firms seeking finance from high street banks had not been able secure any, and a third of those who applied for bank loans were unsuccessful. Those firms seeking finance through other sources than banks were typically able to obtain all or some from trade credit, factoring, grants or subsidised loans, family and friends, as well as formal equity finance and business angels. Main survey results: — Little change in finance-related conditions due to the effects of external conditions were reported, with the exception of the level of cash at the bank. — The survey also reported on management actions taken in response to external conditions: — 70% reported focusing principally on revenue-generating actions. — 29% concentrated on cost-cutting. — 1% reported incorporating cost-cutting and revenue-generating practices Revenue-generators were slightly more likely to achieve better sales and profit margin performance in 2010 than cost-cutters, although the difference was not statistically significant. This suggests that businesses adapting to recession by implementing revenue-generating and cost-cutting actions are equally likely, in aggregate, to perform better during the macroeconomic recovery phase than during recession. In terms of finance-related actions: — About a quarter of SMEs reported renegotiating terms with suppliers. — More businesses increased their use of personal savings (24%) in 2010 compared to 2008–09, whilst reducing debts to external sources. — Less than one in five reported any of the other specified actions—including reducing investment expenditure and shortening payment periods from customers or creditors.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget Empty Rates The issue of empty rates is an ongoing political discussion. The focus has tended to be on large scale regeneration projects and property transactions. However, at a different point in the scale, the current system of Empty Rates is a tax on the growth of SMEs and a brake on economic growth. As a business focused on providing space ﬂexibility to entrepreneurs and SMEs it is essential to hold onto empty space, Workspace and other businesses which focus on providing space for SMEs, require around 10% vacancy rates at any one time to facilitate the churn of small business. The current empty rates regime is a liability to Workspace of £3 million per year. This is the equivalent cost of creating 30,000 square feet of new, ﬂexible, business space, which would accommodate around 120 small businesses creating around 300 jobs.

National Insurance The Government introduced a National Insurance holiday for start-ups outside of London and the south east who take on employees. This fails to recognize the importance of London and the south east as a generator for economic growth, particularly within the SME sector. The costs of taking on employees can be prohibitive, limiting the ability of small firms to grow by taking on permanent staff and increasing reliance on freelancers. Extending the NI holiday to firms in London and the south east and widening the definition of a start-up could generate significant returns in terms of the ability of small firms, who may otherwise rely on contract or reduced staff levels, to take on employees and better afford growth.

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space. Across the Workspace portfolio, a significant level of our customers’ sales and contact networks come from other businesses based within the same centre. Thus, the creation of hubs and clusters is critical. The creation of hubs and clusters facilitates greater networking by bringing businesses together in one area, thus stimulating growth across different sectors and into different business areas. However, it is unrealistic to assume that all sectors can, or should, be accommodated in hubs and clusters. SMEs vary in size and approach and the rapid development of high quality communications makes it significantly easier to conduct effective business across geographies. Furthermore, there is a risk that too much of a focus on creating a destination hub can be counter-productive; many creatives prefer a more individual identity, larger area hubs which effectively take on a corporate identity may put some businesses off. Similarly, responding to the need to recognise the changing nature of the work place, it is important to acknowledge that not all small businesses wish to have a fixed office space—either at early stages or at all. The increase in development of co-working space reflects the fact that business is no longer located in one area but is highly portable assuming the right technology is in place. Workspace recently launched the third Club Workspace in London, a new concept in collaborative working space where people can sign up for membership and simply drop-in to the space to use desks, wifi and network.

Workspace—where ideas, enterprise and business comes together Businesses in London grow faster with Workspace by providing platforms for growth through networking, social media and events as well as physical space. 12% of purchases and 17% of our customers’ sales come from other businesses based within the same centre. We host the capital’s leading dynamic business communities, we help connect them to other businesses, suppliers, buyers and networks. We understand what drives them and use our expertise to champion their cause. Workspace aims to be the first choice for new and growing businesses in London. There is a range of space within and across centres to provide light industrial, workshop and office space of varying sizes; and flexible tenancies. By facilitating the right environment for businesses to grow and network, we create destinations from locations allowing creative and enterprise clusters to flourish. Our Club Workspace concept offers an effective co-working arrangement in a flourishing busy environment for those who do not want to take fixed office premises. Some of our leading brands include: — Moonpig.com. — White Stuff. — Mamma Mio. — Alex and Alexa. Small business is big business; 27.4% of our SMEs trade internationally, exporting across Europe, Asia, Africa and the US. — Setred, based at Kennington is a world-leader in new technology to assist brain scanning during medical procedures. — TM Lewin is a major clothing designer and supplier based at Hatton Square Business Centre. — Caprice Lingerie is based in our Westbourne Studios centre, designing and supplying lingerie to the UK and internationally.

Alex and Alexa—Case Study Alex and Alexa is a fast growing luxury online children’s retailer who in 2007 saw a global opportunity through the digital space with the world as their market rather than the traditional High Street. The UK is their home market but the international side of the business has grown to 70% of their sales. The key dynamic of growth is through the international development of business. Alex and Alexa chose Workspace for the combination of authentic and original building features with modern amenities and facilities and the Workspace network and support throughout London. The environment in which they work has been an important factor in becoming a sizeable global player. Alex and Alexa have recently expanded with Workspace taking an additional 23,000 sq ft warehouse/ distribution centre as well as a 4,900 sq ft ofﬁce at The Biscuit Factory. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the London Organising Committee of the Olympic and Paralympic Games (LOCOG) Submission from Ruth Mackenzie (Director of the Cultural Olympiad) and Craig Beaumont (Government Relations Manager) at the London Organising Committee of the Olympic and Paralympic Games (LOCOG).

Summary This written evidence is submitted to the Culture Media and Sport Select Committee’s Inquiry, particularly noting the call in the Committee’s Press Notice that Members sought views on “How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games.” The London 2012 cultural programme contributed signiﬁcantly to the development of the UK’s creative industries. This submission sets out brieﬂy the opportunities that have arisen from the programme, and suggests the next steps to make the most of this opportunity for the creative industries. This evidence includes three short appendices:79 1. “Interim results of London 2012 Festival shows scale and reach of Games culture offer”—Press release of 30 October. 2. List of Cultural Olympiad/London 2012 Festival Commissions. 3. Summary of funding for Cultural Olympiad/London 2012 Festival.

Coverage and Ceremonies The Olympic and Paralympic Games reached billions of UK and global TV and online viewers. Within the UK, the Olympic Games on the BBC delivered the biggest national television event since current measuring systems began, with 52.1 million viewers (91% of the UK population) watching at least 15 minutes of coverage with 24.2 million (42% of the UK population) watched at least 15 minutes of coverage on the BBC red button. 85% of the audience agreed the coverage helped bring the nation together and 74% agreed the way the BBC covered the Olympics helped them feel part of the event. The Opening Ceremony peak audience was 28.7 million, with an average of 24.2 million, with the Closing Ceremony peak at 27.3 million and an average of 24.2 million. For the Paralympic Games on Channel 4, coverage reached 39.9 million viewers—over 69% of the UK population (compared to 20.5 million coverage for the Beijing 2008 Paralympics). Two thirds (68%) of viewers felt the Paralympic overage had a favourable impact on their perceptions of disabled sport. The Opening Ceremony peak audience was 11.2 million, while a peak audience of 7.7 million viewers watched the Closing Ceremony. Coverage of the ﬁnal day of the Paralympic Games made Channel 4 the most watched television channel across the whole day, and the most watched channel for 16–34YOs and ABC1s. The Ceremonies and the Games provided an unprecedented platform for this country’s creative industries.

London 2012 Festival London 2012 presented a UK-wide cultural programme which culminated this summer with the London 2012 Festival. The Festival achieved 19.8 million attendances UK-wide, including 16.5 million free attendances and 36 million viewers on the BBC from April–September 2012 The London 2012 Festival is now being evaluated by the University of Liverpool, and their evaluation will not be complete until Spring 2013. Initial ﬁndings, however, suggest that the London 2012 Festival is larger in scale than any other UK-wide festival, including the Festival of Britain. The international marketing impact for the UK creative industries including those in the cultural and heritage sector working on cultural tourism will be a priority for the evaluation. Early research by Visit Britain suggests that 43% agreed that they have “made me more interested in getting out and exploring the UK”. 39% agreed they were more interested in taking a trip to London. Initial audience evaluation shows a wide reach and range of audiences domestically. For example, the West Midlands programme has had early evaluation which shows that 43% of the festival audiences and participants were under the age of 25, 16% from BAME and 45% C2/D/E social groups. The Cultural Olympiad provided £27.4 million worth of net economic impact to the West Midlands economy and £80 million worth of gross economic activity was associated with the programme. The programme generated £11 million worth of media coverage for the region. 79 Not printed. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Reach of Cultural Programme in 2012 The London 2012 Festival programme was UK-wide, and as with the Torch Relay, the programme was designed to bring exceptional cultural activities to communities from Shetland to the Scilly Isles. The programme included over 200 commissions to world class artists to create special ambitious projects with and for UK communities, and showcased creative industry talent through the media to world wide audiences. The commissions included all genres—film, music, visual arts, drama, dance, digital art, TV, carnival, and innovative combination of genres. As well as specific commissions in all parts of the UK, the programme included commissions and programmes which aimed to unite communities all over the UK such as “All the Bells” (a commission to Martin Creed—which had 2.9 million participants—to enable people to ring bells all over the UK, led by Big Ben and the bells of all the UK Parliaments, at 8.12 am on the day of the Opening Ceremony of the Olympic Games) and Bandstand Marathon which saw 125,000 band members all over the UK take part in a world record breaking music marathon. The commissions enabled the festival to showcase artists from across the creative industries, attracting worldwide media attention, which the final evaluation will quantify as a benefit to the UK in marketing terms. The festival programme also had 16.5 million free attendances and participants all over the UK. The free opportunities included the chance to see global stars such as Rihanna, Jay Z, Dizzie Rascal, Tracey Emin, Yoko Ono, Mark Rylance, Ai Wei Wei, and many more, but also enabled the showcasing of emerging stars at the events to a much larger and wider audience. These new commissions were only possible thanks to the development of special partnerships which brought together a wide range of partners who rarely (if ever) work together. These new partnerships have benefited artists, creative industries, audiences and communities. For example, the London 2012 film commissions and training programme for young people involved Film 4 and BBC Film working together; with Creative England, BFI and First Light; independent production companies; and a range of other partners including Panasonic as sponsors of Film Nation Shorts, the film competition for young people aged 14–25 to make short films. Unlimited, the largest ever programme of commissions to disabled and deaf artists, brought together the Arts Councils from all four UK nations, the British Council, the Olympic Lottery Distributor, National Theatres in Scotland and Wales, the South Bank Centre in London, the Secretary of State for Culture from the State of Rio, and artists and producers from round the world. The programme of commissions developed capacity, skills and ambition in the sector and fed into the training and artistic development of the Paralympic Opening ceremony, which showcased disabled artists to a global audience. The Ceremonies shared the vision (and many of the artists) to showcase the best of the UK creative industries, in the context of the best artists from round the World, showcasing not only the artists but also a vision of a culturally diverse, innovative, and excellent creative sector which welcomed and participates with talent from round the world. The London 2012 Festival similarly showcased UK artists and cultural and creative leaders in a global context with Damien Hirst at the Tate, next door to Shakespeare in 38 languages from countries round the world next door at Shakespeare’s Globe; with Damon Albarn and Paul McCartney supporting artists like Senegalese Rokia Traore and 80 musicians from Africa, USA and Europe on Africa Express; and with Turner prize winner Jeremy Deller touring his life-size inflatable Stonehenge round the UK free to participants of all ages. Many commissions are already enjoying a continued life—the film commissions have recently played the Rio film festival and Beijing Festival has also just showcased artists from the London 2012 Festival. Inflatable Stonehenge is now touring internationally and is currently in Paris. Both the Ceremonies and the London 2012 Festival showcased UK creative industries across genres—from Shakespeare to street art, from high art to hip hop—and the University of Liverpool evaluation published in Spring 2013 will accurately define the impact and benefits.

Cultural Tourism Opportunities The London 2012 Festival programme worked in many instances with the Olympic and Paralympic Torch Relays, highlighting cultural tourism sites round the UK as part of the programme. The Festival worked with a wide range of local partners on new commissions to showcase some of the most outstanding UK heritage and sites of natural beauty—projects such as Deborah Warner and Fiona Shaw working on nine Beaches in Scotland, Northern Ireland, Wales and England; Richard Long at Boxhill; Hans Peter Kuhn at the Giant’s Causeway; Carabosse at Stonehenge; YesYesNo at Hadrian’s Wall, Lakes Alive at Windermere. These projects attracted media and audiences to these landmarks and marketed them around the world in a way never done before. Projects like Piccadilly Circus Circus and Elizabeth Streb’s One Extraordinary Day combined marketing funding with cultural funding to create free one-off spectacular events which had an impact beyond the live audiences thanks to on-line and social media, press and TV. The impact of these hugely ambitious events cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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required years of planning in collaboration with the Mayor of London and a wide range of operational partners, and their marketing impact will only become clear later. The London 2012 Festival partnerships with local authorities to create one-off ambitious special projects in cities such as Manchester and Birmingham are assessed not only for their artistic impact for local audiences, but also for their cultural tourism impact, and inward investment and creative industry growth opportunities— showing the cultural standards, innovation and ambition of the cities to global audiences. The Festival’s commissions and projects with the free national museums in London and elsewhere in the UK reminded a global audience through press and online of these important visitor attractions, as did the special free partnership events undertaken with the Society of London Theatres.

Next Steps With the Games, the Cultural Olympiad and the London 2012 Festival now complete, the Organising Committee is now being dissolved. 90% of staff have left LOCOG and the remainder will leave shortly. However, all partners, artists and organisations have been aware that LOCOG would not be around to monitor and drive the cultural legacy from the Games, and so plans have always been put together with that very much in mind. The London 2012 Festival evaluation by the University of Liverpool will be made available in Spring 2013. This deﬁnitive research should inform policy-makers as they look to capitalize on the platform for the creative economy created by the Games this year. The innovative partnerships that have been forged through the cultural programme will now continue to bear fruit. The creative sector that thrived working with new partners will work in the same way again, and it is hoped that they will be inspired to seek further new ways of working and new partners. We know that artists and the rest of the creative sector that were energized by the opportunity to showcase their work as part of London 2012 are now looking at future work with vigour, with many using their experience to secure commissions here in the UK in major cultural festivals and new opportunities such as Glasgow 2014, but also further overseas in international aspects of future Olympic host cities and nations such as Sochi 2014 and Rio De Janeiro 2016. These opportunities need to be disseminated as far as possible through our creative sector. Public policy on ensuring legacy for the creative sector should, therefore, be focused primarily on the framework that the creative industries operate within. Ways to ensure dissemination of opportunities across the creative industry need to be further developed. With the Games gone, where and how the creative industries meet to create partnerships—online, or at local, regional or national events—should be examined. Finally, it is important to note that having a strong cultural programme as part of our London 2012 bid in 2005 helped to secure the Games for London. That is proven by the strong cultural programmes we have seen throughout all bidding cities ever since. This also points to a public policy priority. London and the UK should continue to bid for major events, and by doing so we will create new opportunities for the creative sector to be involved, and to showcase the world-beating cultural work we produce in this country. There are already plans to attract other major international sporting events to this country as part of a “golden decade of sport”, alongside our existing cultural events. If further international events come here, we can ensure they have strong cultural elements. And by adding these to our existing astonishing cultural festivals, this will be a “golden decade for the creative industries” too. November 2012

Written evidence submitted by “The Brighton Fuse” Research Team at the University of Brighton, University of Sussex and Wired Sussex

Summary This submission draws on emerging findings from “the Brighton Fuse”, a two-year study of the Brighton & Hove Creative-Digital-IT (CDIT) cluster funded by the Arts and Humanities Research Council (AHRC), and carried out in collaboration between local universities, industry and the Council for Industry and Higher Education. 1. Our findings show that Brighton & Hove CDIT companies strongly benefit from clustering. It is unlikely that effective universal communication would be enough to overcome this “local advantage”. 2. Contrary to conventional wisdom, neither Intellectual Property theft nor Access to Finance figure high among the barriers faced by our respondents. Instead challenges stem from high levels of competition in crowded and fast-changing digital markets, such as “apps”, and lack of skills to deliver innovative products and business models that stand above the crowd in such markets. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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3. Addressing these skills gaps will require innovation in the way that universities coordinate their activities across departments, and in the modes of collaboration between universities and industry. Perhaps the Brighton Fuse project is an example of such innovation. 4. It is also important for policymakers to acknowledge that succeeding in the modern creative economy requires crossover between Technology, Arts and Management, as well as the right policies to support modes of innovation not currently catered for by schemes such as R&D Tax Credits.

5. The Submission 6. This submission is from the researchers working on “The Brighton Fuse” project funded by the Arts and Humanities Research Council. Partner institutions on the project are University of Brighton (Faculty of Arts and CENTRIM), University of Sussex (SPRU), Wired Sussex, and the Council for Industry and Higher Education. The principal investigator for the project is Dr. Jonathan Sapsed, at CENTRIM (University of Brighton). 7. The project is a two-year study of the Creative-Digital-Information Technology (CDIT) cluster of ﬁrms, freelancers and supporting public sector institutions—including arts and cultural institutions—in Brighton. The project aims to estimate the economic contribution of this cluster to the local economy, measure its performance in terms of growth and innovation, and identify the opportunities and challenges—that is, the barriers to growth—that it faces, with the goal of informing future strategies to make the cluster more competitive. It is doing so through a quantitative survey of 500 companies in the Brighton and Hove CDIT cluster, and more than 50 qualitative interviews. 8. Our data collection is still on-going but we are able to share what we believe are some important preliminary results that address the concerns of the Select Committee:

9. The Importance of Clusters in the Creative Sectors: Is there too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication? 10. There is a longstanding belief that proximity within clusters promotes beneficial exchanges of ideas and resources between firms. It also generates economies of scale in the shape of rich pools of skilled labour and providers of complementary inputs and services, which are available for firms in a cluster but not those outside. 11. The increasing availability and capabilities of information and communications technologies has led some to claim that this physical proximity is becoming less important, since people may interact across geographical space through broadband communications services: this is referred to as the “death of distance”. There is also a political sense that clusters and hubs privilege certain cities and regions and therefore ought to be discouraged in favour of more dispersed activity. 12. Our preliminary findings suggest that geographical proximity still plays a pivotal role in the production and innovation activities of companies in the Brighton & Hove CDIT cluster, partly explaining the double digits rate of growth in turnover and employment that our respondents reported between 2010 and 2011, in spite of the recession. 13. Respondents to our survey report that local networks and contacts act as a source of new ideas and inspiration (35%) as well as a recruitment pool and as a source of new opportunities for collaboration. Significant numbers of firms (>40%) claim that they help out other local businesses. 80% of respondents report that local collaborators are important for their firm. 14. These localised advantages appear to be self-sustaining: 9 out of every 10 respondents to our survey were not born in Brighton & Hove, but moved there because of its reputation as a creative place, its lifestyle and quality of life. These reputational effects also appear to hold for potential clients looking for innovative suppliers of creative and digital content and services—Almost half of our respondents say that Brighton’s reputation for its creativity is a boon to their business. 15. Interestingly, our research has found that the ICT platforms that, it has been argued, should diminish the tendency for creative industries to cluster, actually act to further support the dissemination of information within the Brighton & Hove CDIT cluster, complementing other informal face to face meetings, “meet-ups”, and events. 16. What does this mean for policy? While we do accept that a more egalitarian distribution of creative activities across the UK is desirable, and policymakers need to be careful of lavishing funds on those that need them least, they should also be cautious of efforts to “kickstart” new clusters from scratch, or uproot established ones thus dissipating their efficiency and ability to innovate. Our findings are consistent with the thrust of the academic literature, according to which the geography of creativity is “spiky” due to local sources of advantage that we doubt could be overcome by “effective universal communication” or other top-down interventions. 17. This is not to say that new clusters cannot be born and become sustainable—Brighton and Hove’s CDIT cluster has done so. Our research has however found that this did not happen as a consequence of directed public sector support, large inward investments, the presence of “anchor” organisations like the BBC, or a better broadband infrastructure than elsewhere. Rather, it has done so in a rather more organic and not wholly cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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coordinated way, involving business-driven networks such as Wired Sussex, two strong universities that generate talented graduates, and a grassroots artistic and cultural scene that has given the city a reputation that is attractive for would-be entrepreneurs. We should also mention the importance of being close to London, where many clients and collaborators for Brighton & Hove ﬁrms are located.

18. One of the aims of the Brighton and Hove Fuse project is to extract lessons from the experience of the Brighton and Hove CDIT cluster that will be applicable to other parts of the UK.

19. Barriers to growth in the creative industries—such as difﬁculties in accessing private ﬁnance—and the ways in which Government policy should address them

20. In addition to looking at “place-speciﬁc” drivers and barriers to growth, we have also looked at more general ones (note, as before, that the ﬁndings that we report are preliminary).

21. The most important hindrance identiﬁed by our respondents is the current economic climate. This may be interpreted in a number of ways, and there are likely to be sectoral differences.

22. Content businesses such as TV and Radio, Film, Publishing and Music also cited “too much competition in [their] markets”. For example, our qualitative research has suggested that ﬁrms that are trying to develop opportunities in the “app” market for smartphones, tablets and mobile devices are ﬁnding this to be a crowded space. While the “app” market has lowered barriers to entry in that creative and clever ideas can be developed relatively quickly by a small team, this has also meant that competition for visibility and sales is high.

23. Intellectual Property violation through piracy is a prevailing concern in white papers and government legislation. However very few firms in our sample have reported “Illegal infringement of [their] Intellectual Property (including copyright)” as an important barrier to their business (<5%). A similarly low number of firms reported generating substantial revenues from royalties from IP. The Brighton and Hove cluster appears to be predominantly a business-to-business service economy in which IP does not figure greatly. We know however that many businesses would like to generate more revenues from their own IP and if they did so it may be that piracy would then become a greater concern. But currently this does not appear to be a big issue for SMEs in the Brighton and Hove cluster, in spite of the attention this issue receives in policy circles.

24. More surprising is that only 18% of firms reported “difficulties in accessing external finance” as an important hindrance, since this is another issue that receives considerable attention. Policymakers, researchers and business people often indicate availability of external finance as a barrier to growth for UK technology firms. Venture capital and Business Angel finance in particular are seen as scarce in comparison with the United States. We know that the overwhelming majority of small firms are financed internally, and usually by family and friends. The reason why external finance availability is not a hindrance for over 80% of the cluster firms may be because creative-digital work generally does not require large lumpy investments that may be necessary in other technology businesses. Usually the largest cost is for labour and freelancers are typically hired as needed for projects. Also cluster firms may be aware of the difficulties of external finance and so find other ways of managing cash flow. So the results on barriers to growth are somewhat surprising since the two issues of IP and external finance that are commonly raised do not appear as important in this cluster.

25. An important step in our analysis is to consider whether “high growth” ﬁrms in the cluster face distinctive barriers to growth—for example, in terms of access to ﬁnance—compared to the average.

26. Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

27. What is important however, is a lack of skills, an often-cited area of difficulty by policymakers and industry. Nearly 30 % of ICT firms and also creative services such as Advertising and Design in our sample mention gaps in their workforce skills as an important hindrance, while 25% of creative services also find lack of managerial skills in particular a hindrance. These results are in line with broader thinking and the government agenda of improving the skills pipelines for creative-digital industries, such as with the Next Gen report (Nesta, 2011).

28. These skills gaps are relevant because, as we mentioned in §22, one important barrier for companies in the Brighton and Hove CDIT cluster is the need to develop innovative products and business models to compete in new and rapidly changing digital platforms. If these companies are going to design and execute their creative and innovation strategies effectively, they will need access to the right production and management skills, which is a challenge currently.

29. The importance of skills is reflected in how our respondents perceive their competitive advantage. 80% of all firms saw technological expertise as a source of competitive advantage and 100% of the ICT firms. Managerial expertise is shown to be important for competitive advantage of 58% of all firms and particularly so for digital media firms (78%). The perceived importance of these skills as crucial for the success of businesses raises concerns over the gaps in their availability. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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30. The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget; The work of the Creative Industries Council and other public bodies responsible for supporting the sector 31. As regards the inquiry’s central interest in government and public sector support for the creative economy we make some preliminary observations based on our research findings. 32. With reference to the tax reliefs debate we would only say that we have found that significant numbers of firms in our sample (30%) give their staff time to pursue their own innovation projects. These bona fideR& D projects often turn out to be important in incubating ideas for new products and services that sustain business when older offerings reach the end of their life cycle. We have also found cases where these projects have been realised in new spin-off organisations following the demise of the original business, so that they play a role in sustaining employment and innovation in the cluster as a whole. For example, the largest games company in Brighton & Hove—Black Rock—was closed by its owner, Disney, in 2011, yet fifteen “spin-out” companies were created subsequently (colloquially referred to as “the Black Pebbles”) that have stayed in the area. The ideas behind many of these companies had been generated internally, during “ideas generation” sessions. 33. It is not clear that this kind of innovation project would be deemed R&D and therefore eligible for tax reliefs, in spite of how it generates “spillovers” that are clearly not captured by the firm that undertakes them (Black Rock, in the example above). If the application process could be made practical and productive for the small firms engaged in this activity this could be a support for innovation, as well as cluster resilience against the failure of key businesses. 34. The skills base is an obvious area where policy can have a beneficial impact. Our research largely concurs with the conclusion and recommendations of the Livingstone-Hope review mentioned above, which examined the video games and special effects industries. What we find when looking at a broader range of firms is that sectoral needs differ. An adequate response to the skills gaps cannot be focused on solely increasing numbers of computer science graduates, although programming and IT skills are indeed in scarcity. Management, Arts and Design skills matter too. In this respect, much of the policy discourse and debate oversimplifies the creative economy by assuming a divide between science and technology and creativity and the arts, and neglecting the management side. This does not correspond to our understanding of how firms marshal skills and resources to create the products and services that underpin the creative economy. Organisations developing digital and social media, web and television content, digital marketing and search do not identify with either “STEM” or “the arts”, but necessarily combine and recombine these knowledge bases and assets as required for their work. Ensuring that all these types of skills are available is a necessary condition for growth. 35. Addressing current needs by Continuing Professional Development has a difficulty in providing a mix of skills appropriate to these differentiated needs. Firms in the creative economy tend to be small and have little discretionary budgets available for training and staff development. They cannot therefore delegate large numbers of staff for courses that may only be partially relevant to their requirements. In addition the range of courses and variants on offer from universities can be confusing to the small firm. 36. For universities there is a difficulty in tailoring courses for small firms since validation processes for accreditation tend to work at different time scales to small firms, and cost structures may not be sufficiently flexible. In addition the requirements of firms in the creative-digital economy may require an interdisciplinary approach that does not match the typical faculty and school structures of a university. New forms of provision are needed that can release academics from institutional procedures and expectations and make them more responsive to the particularities of the creative economy. This may also involve some flexibility in for example, involving business practitioners in delivery and promoting mentoring programmes. 37. There have been various public sector funded initiatives that have delivered useful contributions to the Brighton and Hove creative-digital-IT cluster, often with the universities working in conjunction with intermediaries such as Wired Sussex. These include an internships programme between University of Sussex and Wired Sussex, and the extensive ProfitNet programme of peer-to- peer learning networks involving over 500 entrepreneurs and local businesses facilitated by University of Brighton. There have also been valuable joint research projects involving universities and industry. The overwhelming contribution of the universities however is in providing a continuous pool of talented graduates to enter the creative economy, in spite of specific skills shortages. We have also found evidence of people who came to the city to study in universities and wished to stay subsequently and became entrepreneurs. 38. We have not found significant evidence of direct government support for firms or for the cluster in general. This is not a story where the cluster has grown through government fiat and investment. Brighton and Hove has not enjoyed the benefits of a large-scale influx of cultural investment such as the BBC moving to Salford, or the drive for an Olympic Park legacy. This successful cluster has over a period of some 20 years grown steadily and organically, but not noisily. Nevertheless there are vibrant, dynamic companies and supporting networks and behaviour such that the cluster is resilient. Now that the cluster has reached a certain scale of activity there are some infrastructural concerns that government can help with. Ultra-fast broadband capability would benefit these firms that are dealing with large data transmission work on a daily basis. Similarly there is a shortage of suitable and secure office space for these businesses in the city. These cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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infrastructural capital concerns may be addressed by policy and would be major sources of support for a cluster that is already growing, but faces constraints. November 2012

Written evidence submitted by UKTV

Overview

1. Formed in 1997, UKTV is an independent commercial joint venture between BBC Worldwide and Scripps Networks International.

2. We are the second largest non-terrestrial broadcaster and one of the most successful multi-channel providers in the UK and Ireland, with a network consisting of 10 parent channels including Dave, Watch, Gold, Alibi, Yesterday, Blighty, Eden, Home, Really and Good Food, and attracting over 40 million viewers per month. UKTV currently operates 22 broadcaster streams when its eight multiplexes and four HD channels are taken into account. We provide branded video on demand services across Sky BT Vision and Talk Talk, and have recently launched a PCVOD service for our free to air channel, Dave, with PCVOD services for Yesterday and Really launching in early November 2012.

3. All channel brands are available through Sky and Virgin Media. Three channels Really, Dave and Yesterday are also available free-to-air on Freeview. The content of this submission only reﬂects the views of UKTV, and not those of our shareholder companies.

4. UKTV welcomes the opportunity to respond to this inquiry into support for the creative economy. This inquiry comes at an opportune time as the Government considers the next steps for a range of areas as part of the Communications Review. This response will look at a number of aspects of this review but also explore a broader range of topics impacting on the TV industry generally and more particularly from the perspective of a multi-channel broadcaster, in particular: — securing a regulatory framework which balances the ability to make most of the opportunities available whilst ensuring that consumers have conﬁdence that their rights will be protected; — the opportunity to consider the consequences of an increased investment in the UK television industry, including: — the need for greater levels of investment in training in relevant skillsets to ensure that any increased demand for skilled personnel is met; — the effect of subsidising the larger players in the industry on smaller and medium sized enterprises; — the concentration of funding in “hubs” to the detriment of out of town producers; — he unintended consequence of proposed regulation of the EPG and the possible detrimental effect on investment in original programming; — the limited spectrum of the current tax relief proposals for high-end television production.

5. It is the view of UKTV that failing to take into consideration these various different elements would be an opportunity missed for the reasons which we set out in our responses to the questions below.

Answers to speciﬁc questions:

6. The ceremonies created a worldwide stage, showcasing the wide variety of creative expertise available within the UK, from technical set design to costume design. Indeed, the fact that there are ongoing discussions about the “Cultural Test” as a requirement for tax relief can only reafﬁrm the contention that there is something very distinctive about productions with their roots in the UK. This, in conjunction with the availability of tax relief for such qualifying productions, can only serve to increase the large number of large budget productions produced in or attracted to the UK.

7. Alongside this, UKTV will seek to continue to commission programming reﬂecting the people, culture, voices and stories of Great Britain. It would be unfortunate to lose the perception and momentum created by the Olympics and Paralympics due to the inability to provide the appropriate level of skilled talent necessary to take advantage of any increased desire to produce content in the UK and the subsequent increased investment in UK production. It is therefore imperative that the government take this opportunity to consider the current proposals for the creative industries hand in hand with consideration of the requirement for relevant education and training. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector 8. The overall aim of government policy should be to encourage the economic development opportunities provided by technological change, whilst ensuring that consumers are safeguarded and have confidence in the media which they consume. 9. One aspect which we would urge the committee to consider is how the regulatory framework can best support the creative industries. A number of these aspects are already being discussed as part of the Communications Review. 10. One issue which is being considered as part of the review which could impact access to investment finance is the suggested change to the regulation of the Electronic Programme Guide (EPG). 11. Research and experience have shown that EPG positioning can have a significant impact on audience and consequently revenues, so it is important that any changes made to the current system are fully considered in order to avoid any unintended consequences. In particular, it is important that the EPG model provides enough transparency and stability to allow broadcasters to plan investment in UK content with a reasonable level of certainty about the likely return on their investment. If this is not achieved, then attracting investment could become more difficult. 12. We have concerns about the possibility, suggested as part of the Communications Review, of linking EPG positions to commissioning spend or investment in public service type broadcasting, with the potential for positions to be reviewed on a frequent basis. Such a move could only serve to work in the favour of the already dominant broadcasters and against the smaller and medium sized networks, and would therefore not support plurality and choice. 13. Further, both of the proposals referenced above could affect investment decisions and likely return on investment, which is difficult when based upon a potentially frequently changing formula. As the EPG position has already been demonstrated to have a direct correlation with share of audience, should radical changes be made, commercial impacts and the resultant revenue would be affected. 14. The recent independent report from Technologia, in which we participated, considered a number of policy options, ranging from doing nothing to totally reforming the regulatory framework. The report concluded that at this point there is no desire or need to transform the EPG regulatory framework. A significant change to the current EPG policy could, on the contrary, be potentially harmful to the Communication Review’s intended goal of encouraging additional investment in content. 15. There is also greater scope for co-ordination between different departments on policies which impact on the creative industries. For example, the creative industries tax credits policy is led by HM Treasury, with the main focus being on the generation of increased revenue. Greater involvement from DCMS in this policy could have led to an expanded consideration of areas such as skills development, or the need to support production outside of London, which could potentially have led to a more widely conceived tax credit rather than the very narrow focus of the high end television tax credit. 16. In addition, this would be an opportune moment to address the dominance of the public service broadcasters and the subsequent effect of this dominance on the creative economy. With the emergence of new technologies where the PSBs are in a position to respond before many of the other entrants to the market, consideration should be given to the effect of that position of influence on how the introduction and exploitation of any such new technology is played out.

The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the government’s response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament) 17. Given that television, like many other sectors of the creative industries, is currently experiencing an era of growth and innovation, we would caution against producing primary legislation which is too specific. Rather, the creative industries could be better supported by primary legislation which deals with general principles, with subsequent specific secondary legislation being introduced to allow regulation to keep up with technical developments. 18. We were supportive of the recommendation within the Hargreaves Review that “Government should deliver copyright exceptions at national level to realise all the opportunities within the EU framework, including format shifting, parody, non-commercial research, and library archiving”. Our own response highlighted the benefits of opening up the particular provisions relating to criticism and review to ensure that the criticism of clips or excerpts from a work fall within any new provisions, rather than the ability simply to comment on a work as a whole. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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19. UKTV is broadly supportive of the orphan works regime suggested as part of the review and would suggest that it is extended into a wider framework for all works used under any new exemptions of creative, transformative or derivative works as well. We are also supportive of the copyright licensing regime suggested in the review. 20. In terms of enforcement of intellectual property rights, UKTV supports the development of a low-cost dispute resolution alternative to using litigation in most circumstances. This could include mediation but a separate approach may be needed for more complex or principle-based disputes, such as arguments, for example, about programme format rights. 21. UKTV welcomed the broad principles of the Digital Economy Act; however we did have some concerns about Ofcom’s proposals for implementing the provisions of the Act and whether they represented any progress for small and medium sized creative business which have to deal more with specific business critical examples of copyright infringement rather than regular mass infringement. 22. The regime implemented by Ofcom relied on predictable volumes on infringement and worked much less well for those companies suffering more sporadic, lesser scale infringement. Whilst our shows are sometimes uploaded to file sharing websites, this does not occur at a frequency which would justify the audited detection regime envisaged under the Digital Economy Act, and is not at a level which would allow a reliable estimation of future infringements on which the Code’s obligations are based. A more flexible regime is needed for the smaller creative business such as UKTV. 23. We would like to see a regime which is a “fast track” flexible system that could allow a rights holder to qualify for access to the ISP’s enforcement process on the basis, not of predicted volume infringement, but of business critical unpredictable infringement. For example, should a clip from a show which reveals important plot information or a result from a show not yet broadcast appear—even if it is the case that the clip is not necessarily repeatedly infringed—information contained within it may then go on to become the subject of social media discussion which the broadcaster would be able to do little about. This could result in what could be perceived as a minor infringement, but actually have significant consequences for the broadcast of the show.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs at certain sectors in the 2012 budget 24. Whilst welcoming the principle behind introduction of tax credits for the creative industries, UKTV has consistently argued that the tax credit for TV production could have a greater impact if its scope were to be extended. 25. The model which is likely to be enacted, with a threshold of £1 million an hour in production costs, will only benefit larger producers, the public service broadcasters and the big international players. The average programme per hour budget for a multi-channel production would be closer to £100,000. 26. Therefore, this tax incentive will not benefit multi-channel broadcasters like UKTV that, whilst continually investing in the UK production industry do not achieve the £1 million threshold, or provide assistance to small and medium production companies and those outside of London. (In 2011 UKTV spent 99% of its commissioning budget with a small to medium production companies, and 20% outside of London). A tax credit which applied to a broader range of productions would be more effective in attracting investment in the UK creative industries. 27. We have suggested alternative approaches to the Treasury such as measuring tax relief in relation to annual investment over a year, or offering a tiered approach to the tax relief available, which would offer greater levels of relief for greater spending. We understand that this is unlikely to happen at the moment given the Treasury’s stated aim with the TV tax credit of increasing the competitiveness of the UK compared to other countries for high end productions. 28. However, we would argue that future consideration needs to be given to rapidly developing markets such as multi-platform which have the potential to contribute significantly to skills development and economic growth. Multi-platform content takes advantage of the increasingly diverse ranges of ways in which the public watch and otherwise interact with TV programmes, for example by mobile applications. This has the potential to be a real growth area for the future and the Government should consider how to make the most of the opportunities which this presents for the creative industries. 29. Consideration could also be given to using the tax credit to incentivise work with small to medium sized production companies, or those independent production companies outside of London. The aim should be to benefit the industry as a whole and not simply the well-established subset of the industry to the detriment of others.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this 30. In recognising the requirement for an increased investment in the provision of skills to support any increased investment, and that further and higher education play a role in encouraging the distribution of cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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knowledge in these areas, consideration should also be given to the potential for increased opportunities for apprenticeships and other forms of training.

Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication 31. UKTV has previously raised the issue of ensuring that there is sufﬁcient support for production companies based outside London. In particular, we have raised concerns that the tax credits for high end TV production could beneﬁt production companies based in London at the expense of those based outside the capital. 32. Before implementing policy, the Government needs to consider what impact this could have on different sectors or regions, even if this is not the key reason for introducing the policy.

The work of the Creative Industries Council and other public bodies responsible for supporting the sector 33. Whilst we do not have any speciﬁc comments about the Creative Industries Council and other public bodies, we would draw attention to the launch of the £1 million multiplatform TV fund by Creative England in recognising and supporting our contention that this is an area where further investment could lead to increased growth.

Conclusion and Recommendations 34. The Communications Review is already providing one opportunity for the government to consider the means by which the UK creative industry can be supported. As part of this review, we have already suggested that the Government should consider the potential consequences of significant changes to the current regulatory system, such as: — the impact that changes to EPG regulation could have on the ability to attract investment in new programming; — the impact of any increased demand for creative and technical talent in the UK; and — the requirement for education to ensure that the UK develops the skillset to meet such opportunity and demand. 35. In considering their policy changes, different departments, such as Culture, Media and Sport and HM Treasury, should work together closely to consider the overall impact changes such as the creative industry tax credits to ensure that all consequences, financial educational or otherwise, are taken into account. In particular, HM Treasury and the Department for Culture Media and Sport should review the impact of the tax credit following implementation and be tasked with giving active consideration to other areas where such an approach would be beneficial. 36. In considering the copyright regime, consideration should be given to the broader picture and to those smaller companies which do not necessarily suffer infringement on a large scale but for which, in certain circumstances, even limited infringement could have potentially significant consequences. 37. As a general comment, across this policy area, consideration should be given as to how particular policies impact on not only the major market players, but the consequent impact of any changes on SMEs and business based both inside and outside of London. November 2012

Written evidence submitted by the Film Distributors’ Association 1. Film Distributors’ Association Ltd. (FDA) welcomes the opportunity to respond to the CMS Select Committee’s Inquiry. 2. FDA is the trade body for UK theatrical film distributors, the companies that release films for cinema audiences. The feature films brought to market by FDA member companies—ranging widely from international blockbusters to classic revivals; and from British films to productions of 42 other countries in 2011—account for 97% of UK cinema admissions. Lord Puttnam of Queensgate CBE is FDA’s President. 3. Theatrical film distribution is a sophisticated, competitive and dynamic business that depends on product and the extent to which it connects with audiences. In 2011, FDA’s membership invested more than £330 million in bringing more than 570 individual titles to market. With 1% of the global population, the UK generates 7% of global cinema box-office receipts (£1.12 billion from 171.5 million admissions in 2011). Overall, the sector operates successfully and delivers a significant contribution to the economy in terms of revenue and jobs, as well as the consequent cultural and creative impacts. An economic multiplier effect applies: for every £1 spent on cinema tickets, at least a further £2 is pumped into the economy on directly related expenditure. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Issues

1. How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games

FDA was very pleased to see film strongly represented in the Opening Ceremony of the Olympics. The use of film properties—including the James Bond, Harry Potter and Mr Bean franchises, Chariots of Fire, Mary Poppins and Slumdog Millionaire—underlined the strength and vitality of the UK film industry and the importance that film has in representing the UK to the world. It was also a testament to the effective distribution of those films around the world such that audiences everywhere instantly recognise these titles and identify them as British.

FDA would like to see the Government build on the legacy of the Olympics and the Paralympics by ensuring that film distribution is placed more firmly at the heart of policy for the creative industries. The use of film in the Opening Ceremony in particular, clearly demonstrated that it is a powerful symbol for representing the UK to the world. It is the distribution of film to cinema audiences in the UK and across the globe that ensures that audiences recognise film in this way.

The continuing strength of cinemagoing in the UK is demonstrated by this year’s cinema admissions. Despite intense competition for media and public attention from Euro 2012 and the Olympics, cinemagoing has remained broadly healthy and we estimate that admissions will reach 170 million this year. Nevertheless, the week of the Diamond Jubilee double bank holiday in June was one of the strongest weeks for cinemagoing in 2012 to date, and we would welcome the introduction of one additional bank holiday weekend annually for UK citizens.

Yet most policy and financial support for film in the UK tends to be focussed on the supply side rather than on further stimulating demand. We welcomed the strong emphasis placed on audiences in Lord Smith’s Film Policy Review published in January this year, and some of this emphasis has been reflected in the British Film Institute’s recently published plan Film Forever. However, the fact that, for example, the BFI is not providing a financial uplift in Lottery support for the distribution of films, even though support for other sectors is being significantly increased, demonstrates that more needs to be done in getting the balance right between measures to support supply and measures intended to help stimulate demand.

Without effective distribution at home and abroad, backed by significant investment in prints and advertising (P&A) costs, films or characters such as James Bond, Harry Potter and Slumdog Millionaire would not have become beacons which can be used to symbolise the UK at global events such as the Olympics and Paralympics. FDA believes that Parliament and public policymakers need to ensure that this strategic importance of distribution is more appropriately reflected in policy for film and the creative economy as a whole.

FDA welcomes the support provided by Government funding—via the BFI—to support some distribution activities where there are identified market failures which make accessing private finance difficult—for example in relation to the distribution of specialised films and in audience development and film education, although as noted in answer to Q.1 above we believe that a better balance needs to be struck between interventions addressing supply and those addressing demand.

We believe there are barriers to growth within our sector, in particular the insufﬁciently ﬂexible operation of windows of theatrical exclusivity and the funding mechanisms for conversion from 35mm to digital cinema systems, and at this stage we would like to draw these to the attention of policymakers.

Regarding the delivery of policy, the Department for Culture, Media and Sport (DCMS) is responsible for sponsoring the creative industries. The Government however has made major cuts to the budget of DCMS such that it is barely recognisable as a stand-alone department. There is an increasing mismatch between statements from Ministers about the Government’s view of the strategic importance of the creative economy (worth £4.6 billion to GDP in 2011) and the level of resources devoted to championing that economy. Given the level of cuts already absorbed by the DCMS we would like some reassurance that in the next Comprehensive Spending Review the Government will not further reduce the Grant in Aid money available to champion and help support the creative economy including ﬁlm.

While the DCMS sponsors the creative economy, responsibility for Intellectual Property (IP) lies principally, although not exclusively, with the Intellectual Property Ofﬁce (IPO) which sits within the Department for Business, Innovation and Skills (BIS). This means that policy is not always as joined up as it should be. We would welcome moves by the Government to make sure that IP policy is more joined up—for example through the creation of a Cabinet Committee for IP. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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3. The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament FDA supports the statement in the Hargreaves Review that: “Government should pursue an integrated approach based on enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields.” Likewise we welcomed Hargreaves’s recognition that “without copyright protection, British creators and creative industries, from film directors to video game developers, would have less incentive to create new works, to the detriment of the UK’s culture and economy”. The Government response to Hargreaves noted that “there is a fundamental role for copyright in providing appropriate incentives for the creation of valuable works.” However, we would underline that it is the distribution of works to the public, as well as their creation, which copyright helps to protect. We also welcomed Hargreaves’s assertion that “certain restrictions on copyright are necessary to ensure an appropriate balance between benefits to the creative economy, from protecting works and wider benefits to the public and society from allowing them to be used freely”. Licensing is an excellent way of allowing the correct balance to be struck between providing access for consumers on the one hand with the ability of rights holders to monetise their own works on the other. We support Richard Hooper’s proposals for a voluntary copyright hub to the extent that it will, in the words of Hooper’s final report, “act as a signpost and be a navigation mechanism to the complex world of copyright…[and[] be the place to go for copyright education.” But FDA believes that the estimates made by Hargreaves that economic growth of up to £7.9 billion could be driven by changes to copyright legislation are not supported by meaningful evidence and they are a gross over-estimation of the likely impact of any such changes. It is highly unfortunate that the Government appeared to accept Hargreaves’s estimates in its response to the Review. We believe there is no evidence that there should be wholesale changes to the current system of copyright exceptions in order to deliver growth. However, we do recognise that some reform is necessary in order to reflect on-going changes in technology and consumer attitudes (eg to parody), and we support certain proposals which are consistent with EU and international legal and business practice—for example, the proposal in the Enterprise and Regulatory Reform Bill which would allow the legal distribution of orphan works. However, it remains extremely frustrating that more than two and a half years after the Digital Economy Act became law that the provisions intended to significantly reduce copyright infringement have yet to be implemented. The delay has been caused principally by legal challenges but we believe that the Government must do everything in its power to ensure that Ofcom now implements the relevant clauses as quickly as possible. We welcome the publication of the Draft Initial Obligations Code by Ofcom. But we remain extremely concerned that the level of costs and the way in which the Government and Ofcom have decided they should be apportioned between rights holders and Internet Service Providers means that smaller companies—and the film distribution world includes many Small and Medium-Sized Enterprises (SMEs)—will simply not be able to afford to take advantage of the provisions to help protect their copyrights online. We do not believe it was the intention of Parliament to exclude many smaller companies in this way and we would urge the Select Committee to consider this issue and ways in which it might be addressed. Section 97A of the Copyright, Designs and Patents Act has now been used to block access to Newzbin2 and Pirate Bay But we believe that the Government should look at ways in which the legal process by which Section 97A is implemented in such cases could be speeded up. We are now content with Clause 57 of the Enterprise and Regulatory Reform Bill, as amended by the Government, having accepted the Government’s assurances as to its purpose. But we remain concerned that in future changes to copyright exceptions may be introduced by secondary, rather than primary, legislation thereby preventing effective Parliamentary scrutiny of any such proposed changes. We are especially concerned that the Government may seek to ‘bundle’ future changes to copyright exceptions into one Statutory Instrument (SI). The effect of this would be that there would be no scope for Parliamentarians to accept some proposed changes, while rejecting others. We therefore believe that the Government should state that it any changes to copyright exceptions will be made by separate SIs to allow Parliament the opportunity for proper consideration of the advantages and disadvantages of changes to each proposed exception. Finally, it is important that effective enforcement is matched by effective copyright education to help the public understand what is and what is not legal, while the development of new services also plays a vital role in helping to stem infringement and theft. The new offers from LoveFilm, Netflix and Sky (via its Now TV service) are all very welcome additions to a dynamic online market for film. As a member of both the Creative Coalition and Alliance for IP, FDA also supports their submissions to the inquiry. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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4. The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget

We believe that the tax reliefs introduced in the 2012 Budget should be given time to work and that their impact needs to be demonstrated before any case is made for extending them to other parts of the creative industries.

5. Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

FDA believes that investment in skills is essential to maintain the competitiveness of our creative economy. FDA is a long-standing key partner sponsor of the National Film & Television School, having contributed for and on behalf of its member distributors more than £1 million in direct funding in recent years. FDA is also represented on the Council of Skillset, the Sector Skills Council for the creative industries.

The industry as a whole supports many courses and resources at all levels of education, as well as many regional ﬁlm schools around the UK.

FDA believes that it is in the industry’s best long-term interests to support and encourage more distribution business expertise too, including marketing, communications, ﬁnance, trailer-making, events management, partnership negotiation and new technologies. In the ﬁlm skills strategy that is now being developed by Creative Skillset and the BFI, we would like to see a better balance between production and distribution skills development than has been the case with previous strategies.

We suggest that, where practical, more ﬁlm industry apprenticeships and mentoring schemes are considered and that a foundation in distribution is offered to all young people entering any branch of the industry. FDA itself offers a foundation course to recent starters in the distribution sector.

We are very concerned about the implications of the de-skilling that has taken place in the UK exhibition sector with the roll-out of digital cinema. To the extent that it diminishes the quality of the experience and on- screen presentation enjoyed by paying audiences, it has the potential to reduce the business development opportunities for ﬁlm distributors. FDA is developing plans to work with industry partners to address this key issue, but we are keen at this stage to draw it to the attention of policymakers.

Most distribution companies have their headquarters in or around London, although they distribute their ﬁlms across the UK. This is a long-established model and has worked well over many decades. From a distribution perspective, therefore, we do not see any public policy issues arising in relation to “clusters” or “hubs.”

7. The work of the Creative Industries Council and other public bodies responsible for supporting the sector

The Creative Industries Council has commissioned some valuable research on skills and on access to ﬁnance. However, we broadly support the proposals made by the Secretary of State at BIS, as reﬂected in the last published minutes of the Council from June 2012 that “future meetings should enjoy greater industry direction including [an] industry chair.” This will help to ensure that the Council remains attuned to the needs of businesses operating across the creative economy.

We liaise regularly with the BFI in its role as lead agency for film. While the BFI’s plan, Film Forever, is broadly welcome—albeit coming more than two years after the abolition of the UK Film Council—we would like to see greater and continuing engagement with the film distribution sector over policy matters as a whole. For example, in relation to matters affecting copyright, and stronger engagement with funding plans such as proposals to make available 10,000 titles from the BFI’s and other archives. It is crucial that public bodies in the creative economy listen to and work closely with the private sector, to ensure that opportunities to grow the creative economy are maximised and efficiently implemented. November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by Make Me Laugh Research Project Dr Brett Mills and Dr Sarah Ralph Make Me Laugh Research Project School of Film, Television and Media Studies, University of East Anglia

1. Introduction 1.1 Make Me Laugh Research Project 1.1(a) Make Me Laugh: Creativity in the British Television Comedy Industry is a three-year research project (January 2012 to December 2014) funded by the Arts and Humanities Research Council and run by the School of Film, Television and Media Studies at the University of East Anglia, with Dr Brett Mills as the project’s Principal Investigator and Dr Sarah Ralph as the Research Associate. 1.1(b) The project examines the nature of creativity within the British television comedy industry by interviewing writers, producers, directors, commissioners and other industry professionals, about their working practices, and the contexts that shape and form what they do. 1.1(c) This submission to the CMS Committee’s inquiry draws extensively on the project’s ﬁndings so far, and both refers to and quotes material gathered via these interviews. 1.1(d) The remainder of our submission is structured in the form of responses to only those speciﬁc issues the Committee wishes to address that converge with the substance of our material to date.

1.2 Research Context and Relevance: The Comedy Industry as a Case Study 1.2(a) The British television comedy industry presents a particularly appropriate focal example through which creativity and the creative industries can be considered more broadly. Firstly, producing comedy is understood to be a “risky genre”80 requiring “craft skills”81 and it therefore offers a ripe site for the examination of creativity as a whole. Secondly, British definitions of public service broadcasting remain wedded to the production of comedy, and the BBC notes that its audience councils see comedy as able to “contribute to cultural excellence”.82 Thirdly, the majority of workers in the comedy industry define themselves generically,83 and therefore characterise their creativity precisely in terms of its comedy context. Fourthly, a significant part of television comedy production in the UK emanates from independent production companies, and it was this genre which was most successful in terms of independent production when, in the 1980s, the sector first experienced significant growth.84 This preponderance of independent production, feeding both commercial and publicly-funded broadcasting, demonstrates the centrality of “creative autonomy”85 to the comedy sector, and fosters exploration of “the relationships between publicly-funded culture and the creative industries”.86 The responses of comedy professionals contributing to the Make Me Laugh project thus make a significant contribution to on-going policy debates concerning creativity, the creative industries and creative personnel.

2. Barriers to Growth in the Creative Industries 2.1 Job Insecurity 2.1(a) Our research interviews with television comedy workers at various stages of their career endorses the notion that the lack of security and irregularity of work—particularly for writers and junior employees—is a central concern and thus an obstacle to growth. Respondents stated having to juggle various jobs simultaneously, limiting the ability to develop their career. The majority of work is on a freelance contract, and therefore workers spend much time on managing their career rather than carrying out creative labour. 2.1(b) Job insecurity was referred to by creative workers at all levels, and not just those trying to gain a foothold in the industry. While some acknowledged that insecurity can be a spur to creativity, our participants repeatedly referred to an inability to plan and therefore a focus on short-term goals. Some respondents acknowledged taking work that was of little interest to them and had little creativity, simply to fund other more creative and stimulating work. 2.1(c) Debates about the creative industries hinge upon the key notion that the workers who work within it, and the form and structure of the labour do, differ from that required in other industry sectors. Graham Murdock notes that moves in the cultural industries “toward outsourcing production, relying more on freelance labour, and assembling teams on a project-by-project basis” unite to create an insecure and unpredictable environment 80 BBC, Annual Report and Accounts 2010/11, Part 2. London: BBC, 2009, p. 27. 81 Michael Mulkay, On Humour: Its Nature and Its Place in Modern Society. Basil Blackwell: Oxford, 1988, p. 7. 82 BBC, Annual Report and Accounts 2008/9, Part 1. London: BBC, 2009, p. 20. 83 Brett Mills, The Sitcom. Edinburgh University Press: Edinburgh, 2009, p. 51. 84 Sylvia Harvey, “Channel Four Television: From Annan to Grade”, in Ed Buscombe, 2000 (ed.), British Television: A Reader. Oxford: Oxford University Press, 2000, p. 113. 85 David Hesmondhalgh, The Cultural Industries. 2nd Edition, London: Sage, 2007, p. 68. 86 John Holden, “Publicly-funded culture and the creative industries”. London: Demos, 2007, p. 8. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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for those with a career in the cultural industries.87 For Mark Deuze, the employer-employee relationship within the media industry is built upon short-term, individualized, and conditional contracts meaning that companies have no sense of formal responsibility for providing media workers with permanent employment or supporting their career development.88 Those at the start of their media career and in junior positions are particularly endangered by the increased competition for jobs and insecurity that this system creates. However, even those with more established careers may experience uncertainty. Short-term contracts mean that “[j]ob- seeking is relentless” and there is a perpetual concern about gaps in employment, and thus in income.89

2.2 Accessing private finance 2.2(a) While the Call for written submissions to this inquiry gave the example of difficulties in accessing private finance as a potential barrier to growth within the sector, the industry professionals we have interviewed do not perceive this to be a significant concern. 2.2(b) However, it may be that this was not an area of concern simply because, as one producer noted, access to private finance was “not expected” and so was not a context ever referred to in such work. This therefore does not mean that making access to private finance easier would not make the television industry more creative and/or successful. 2.2(c) Interviewees acknowledged that access to private finance would be of more value to newer, less- established companies rather than established ones, and could be a significant boost to innovative and original ideas.

2.3 Payment for Work 2.3(a) Over time, discrepancies have arisen between the payments writers receive for work on terrestrial, digital and satellite broadcasters. It is increasingly the case that writers receive no residual payments for work for satellite channels, and instead are paid once only. This has resulted in a two-tier payment system for the same labour. Furthermore, the lack of repeat fees means workers cannot plan for the future, relying on those fees for their income. Finally, many respondents felt such a system was unfair as broadcasters often did make proﬁts from repeats, and yet those proﬁts were not shared with the creative personnel involved in production.

3. Taxation and the Growth of the Creative Economy 3.1 Tax Relief Benefits 3.1(a) The announcement by the DCMS of a consultation on the introduction of tax reliefs for the creative sector—specifically high-end television—is viewed very positively by industry professionals. With the traditional model of production being fully-funded by a broadcaster at the point of commissioning now coming to an end, there are funding deficits that production companies need to fill. This will especially be felt by start-ups, small and medium-sized independent production companies where business margins are smaller. As broadcasters continue to cut their budgets and the funding gap becomes wider, government tax reliefs such as those proposed were considered by one production company Managing Director as having the capacity to become “more and more helpful” to their growth. 3.1(b) Writers acknowledged the value of working tax credit, which was seen as essential to freelance workers and reduced the problems encountered by workers with irregular employment patterns. The scheme was upheld as essential for supporting newer workers to the industry, and therefore highly beneficial to innovation and creativity.

3.2 (New) Enterprise Allowance Scheme 3.2(a) The New Enterprise Allowance Scheme (NEA) launched by the government in October 2010 was a revival of the Enterprise Allowance Scheme (EAS) set up in the early 1980s which allowed the unemployed to set up a business while claiming benefits. The original initiative funded a number of high profile creative at the start of their careers such as artist Tracey Emin, Creation Records founder Alan McGee90 and comedy writer Charlie Higson.91 3.2(b) The NEA has encountered a number of problems however, such as the low percentage of women benefiting from the scheme (17%) particularly when compared with those who were helped under the original 87 Graham Murdock, “Back to Work: Cultural Labor in Altered Times”, in Andrew Beck. (ed) Cultural Work: Understanding the Cultural Industries. London: Routledge, 2003, p. 31. 88 Mark Deuze, Media Work. Cambridge: Polity Press, 2007, p. 3. 89 David Hesmondhalgh and Sarah Baker, Creative Labour: Media Work in Three Cultural Industries. London: Routledge, 2011, p. 121. 90 Louise Armitstead and Andrew Cave, “Tories pledge support for small firms”, The Telegraph, 6 March 2010. Accessed online 30 October 2012: www.telegraph.co.uk/finance/7384969/Tories-pledge-support-for-small-firms.html 91 “Funny Business: Interviews with Members of the British Terrestrial Television Comedy Industry” (2005–06). Data from this research project, including Higson’s advocacy of the EAS, are published in Brett Mills, The Sitcom Edinburgh University Press: Edinburgh, 2009. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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initiative (39%).92 The reasons for this percentage decrease—a reduction in the period of support from one year to six months, the elimination of some additional remunerations such as reimbursement of all business- related travel expenses—are not, in essence, gender-speciﬁc but are impediments that are particularly unfavourable to women.

3.3 Tax Reliefs and Definitions 3.3(a) While the official announcement of the DCMS consultation did not contain a definition of “high-end television”, the original Consultation Document from June 2012 states that “the relief is proposed to apply to drama productions and this would include comedy programmes”.93 The inclusion of comedy within the DCMS definition was not only welcomed by those industry professionals we have spoken to, but absolutely presumed. This is because “there is very little difference in the execution of comedy and drama” as “the process, the development process, the filming processes are very similar” [Comedy Producer/Executive Producer]. It would be “unfathomable” therefore, for the DCMS definition of high-end television not to include scripted comedy. 3.3(b) In much of the media coverage of the DCMS announcement the assumption was made that the term “high-end” equated to television drama,94 and this tendency was picked up on by our research participants. With the consultation currently “seeking views on how to define high-end television”95 a number of our participants desired the concretising of a definition that includes comedy programmes.

4. Ways to Establish a Strong Skills Base to Support the Creative Economy, including the Role of Further and Higher Education in this 4.1 Further and Higher Education 4.1(a) Interviewees felt that much creative work in education—such a creative writing, or drama courses— focuses on theatre, ﬁlm and the novel, with television being marginalised. This therefore meant that those working in the television industry had to learn “on the job” to a larger extent than those in other media. 4.1(b) Interviewees therefore called for the education sector (and policy makers) to not only take media education seriously, but also to acknowledge within such curricula that a range of media work is available, without prioritising “traditional” cultural forms such as cinema and theatre. It was felt that, considering the wealth of television work available, it would be good if medium-speciﬁc training was available, and students were encouraged to see the value in a range of work in the creative industries.

5. “Clusters” and “Hubs” in the Creative Sector 5.1 The London-Centric Nature of the Industry 5.1(a) Whilst the spread and scope of worldwide communications systems presents the opportunity of creative businesses being located anywhere in the UK, there is a “resilience of place” within cultural production. Murdock argues that those who work freelance in project-based collaborations rely heavily on social capital as a means of securing introductions, opportunities and career progression.96 For these interactions, cyber- or virtual exchanges are not an adequate replacement for “concerted socializing”. Our research demonstrates that this is the case at all levels of employment for workers within television comedy. 5.1(b) Interviewees stated that independent production companies making scripted comedy and comedy entertainment need to be located in London in order to be in close proximity to the commissioning editors, writers and performers that specialise in this genre. It was felt that creating hubs elsewhere would be possible but workers would simply spend a lot of time on trains returning to London to meet with commissioning editors. 5.1(c) Furthermore, the social nature of working in the industry was seen as vital, which requires workers living in close proximity. This was seen to be especially valuable for writers, who spend much of their time working alone, and who are given no deﬁned space by broadcasters in which to work. A writers’ community is therefore an essential support network. This can be seen as an outcome of a failure of the industry to adequately support and mentor writers, especially those new to the industry. 5.1(d) Signiﬁcantly, writers took much satisfaction from their “self-imposed” clusters, even though these required working in places not established for that purpose. For example, many writers acknowledged that they used the Royal Festival Hall as a work space and a community space. This can be seen as creative workers productively arranging their own communities. However, it can also be seen as a consequence of a failure by the industry to give adequate workspace to such workers; indeed, one writer acknowledged that, even when 92 Erika Watson, “New Enterprise Allowance: Not Working For Women”, Prowess2.0: Women in Business. Accessed 31 October 2012: www.prowess.org.uk/new-enterprise-allowance.htm. 93 HM Treasury, Consultation on creative sector tax reliefs. Accessed 1 November 2012: www.hm-treasury.gov.uk/d/consult_ creative_sector_tax_reliefs_180612.pdf 94 For examples see Balihar Khalsa, “DCMS Opens Tax Relief Consultation”. BroadcastNow. Accessed 1 November 2012: www.broadcastnow.co.uk/news/indies/dcms-opens-tax-relief-consultation/5047245.article , and Adam Sherwin, “Tax deal for shoot-’em-ups (as long as they’re ‘British’)”. The Independent, 4 October 2012. 95 Consultation document, p. 17. 96 Murdock, 2003, p. 26. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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commissioned to write something no space was ever given in which to carry out that work, and therefore many creative workers are required to “squat” in rooms where they could.

6. The Support of Public Bodies such as the Creative Industries Council 6.1 Visibility and Awareness of Such Bodies 6.1(a) Leadbeater and Oakley have noted that a key rationale behind public policy’s failure to keep up with the demands of the creative industries is that policy-making—at local and national level—is frequently split between “culture” and “economic development” departments which have different agendas.97 The Creative Industries Council (CIC), in which both the DCMS and the Department for Business, Innovation and Skills are working together to increase growth in the creative industries, has the potential to resolve this division. However, what emerges from our research is that creative industries workers are unaware of the CIC’s existence and, once informed, are sceptical about the necessity and function of such public bodies. None of our interviewees had heard of the CIC. 6.1(b) In addition, there is perplexity over what the function of public bodies such as the CIC have and what “deficit” or “gap” they are attempting to fill. Bodies like the Producers Alliance for Cinema and Television are perceived as having an easily identified function even if their actual power is perceived to be questionable. 6.1(c) Respondents felt that public bodies that formally cover television often did so reluctantly, and never gave television as much support as other media. The British Film institute (whose very name elides its interest in television) and BAFTA were both seen as not “natural homes” for those who work in television. Indeed, it was felt that there was no such home for those who work in television (though some acknowledged work by the Royal Television Society and the National Film and Television School), and this was at odds to the public and vocal support afforded other creative industries.

6.2 NESTA Mentor Scheme 6.2(a) Business advice and finance is most often tailored to the needs of mainstream business, and while those within the creative industries recognise the need for such advice they would prefer that this was provided by peers that they can identify with and who have knowledge of the industry they work in.98 Thus business mentoring schemes initiated by public bodies which aim to support the creative industries can offer particularized support and advice for creative companies that is not available elsewhere. 6.2(b) The National Endowment for Science, Technology and the Arts (NESTA), prior to its change in status from a non-executive government public body to a charitable trust in October 2010, ran a pilot mentoring scheme which one of the industry professionals participating in our research project took part in when they first founded their production company. The scheme—pairing up an established industry professional with a start-up in the same creative sector for a year—proved to be very successful in the case of our one of our participant’s production company when it was a fledgling start-up. The mentor provided a “sounding board” and was an advice-giver from outside of the “little bubble” of the company’s employees to talk business issues through with. 6.2(c) The pilot scheme found a strong link between creative business mentoring and future business success (95% of businesses that took part in the pilot reported increased confidence, 85% had improved networks and contacts, and profitability was improved for 53% of companies).99 The scheme has now been launched as the Creative Business Mentor Network (CBMN) with mentors and companies having already been matched for the 2012 scheme. November 2012

Written evidence submitted by the Creators’ Rights Alliance The Creators’ Rights Alliance’s (CRA) Interest The CRA is an affiliation of organisations representing the interests of over 100,000 original creators in a wide range of fields—including music, illustration, journalism, photography and writing.100 Most of the 100,000 creators we represent make their living by licensing copyright and performers’ rights in their work. The majority of that 100,000 are freelance—meaning that they by default own copyright in their work and in general depend for a significant proportion of their income on equitable remuneration for re-uses of that work. Almost all of these are rights-holders, offering media that publish or broadcast their work the licence necessary for that purpose and retaining the right to issue licences for second and subsequent uses, translations, and so on. 97 Charles Leadbeater and Kate Oakley, “Why Cultural Entrepreneurs Matter”, The Independents: Britain’s New Cultural Entrepreneurs. London: Demos, 1999, p. 18. 98 Leadbeater and Oakley, 1999, p. 18. 99 NESTA press release regarding Creative Business Mentor Network. Accessed 29 October 2012: www.nesta.org.uk/press_ releases/assets/features/industry_experts_line_up_to_mentor_uks_brightest_creative_businesses 100 See www.creatorsrights.org.uk and the list of member organisations appended below cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The CRA has agreed with consumer interests, notably Consumer Focus, that action must be taken: — to make the personal property rights to be identified as author of one’s work and to defend its integrity automatic, universal and enforceable; and — to level the playing field for negotiation of contracts concerning copyright, whether between a creator and an intermediary such as a publisher or broadcaster; or between a consumer and an intermediary such as a publisher, broadcaster or online service provider. These are not just matters of concern to professional creators. These changes would be of benefit to every citizen, now that so many people are publishing and broadcasting their own works through social media. But there is a risk of these rights in effect being weakened by proposals in the Enterprise and Regulatory Reform Bill. We give brief answers to selected questions from the Committee below. We would welcome an invitation to expand upon these in oral evidence.

The Committee’s Questions Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector The barrier to growth with which CRA member organisations are most concerned is the difficulty in sustaining a career as an independent professional creator. Access to finance is not typically a major issue, except for those who wish to cease being an independent creator and become an intermediary, packaging and distributing the works of others. First among the barriers to a career as an independent professional creator are the prevalence of works being distributed with insufficient credit, and of onerous contracts being imposed by intermediaries. Many intermediaries are ogliopsonies—that is, they are each a member of a small group of potential clients to which a particular creator may offer their work. The implications for market distortion are clear.

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(1) Enforceable unwaivable moral rights for all creators, including an enforceable prohibition on removing metadata, are brought in at the same time; (2) Only collecting societies democratically controlled by creators in the field may issue either kind of licence; (3) Said collecting societies’ handling of applications for such licences shall be subject to government regulation; (4) Licences are for a fee reflecting the market rate; and (5) Unclaimed monies should be applied to the benefit of authors as a whole, eg for training and education. Another question not asked is whether extended collective licensing should extend to unpublished works. We repeat for the benefit of the Committee the observation that it has been possible to introduce extended collective licensing in the Nordic countries only because those countries’ legislation includes very strong presumptions of equitable remuneration for the individual creator and enforceable, automatic rights to identification and integrity. Introducing ECL, not against this background but against that of malpractice prevalent in the UK, is of dubious legality, to say the least, under the Berne Convention and the World Trade Organization TRIPS (Trade- Related Aspects of Intellectual Property Rights) Agreement.

2. Orphan works The other proposed Regulations to be authorised by Clause 68, to introduce schemes for the licensing of “orphan works”, raises many of the same questions and should, if introduced, be subject to the same conditions. We welcome the assurances that officials have given in the two meetings so far of the Intellectual Property Office Working Group on ECL and orphan works, particularly the general assurance that the goal of any changes must be to avoid distorting the markets for works by known authors. These assurances are, however, valid only for the lifetime of the present government: and the powers proposed under Clause 68 would enable future governments to make quite different Regulations—indeed the justification given by senior Intellectual Property Office (IPO) officials for an Act that empowers Ministers to make Regulations in the widest terms is that this would allow rewriting to rectify “errors”. It would also allow a future government, perhaps facing even stronger lobbying from very powerful US commercial interests, to make Regulations with quite different intent. The CRA therefore believes that further safeguards are necessary on the face of the Bill. At risk of telling the Committee what it already knows, prime among these must be measures to prevent future works being “orphaned” by introducing effective deterrents against removing identifying “metadata” from works. 3. Turning to Clause 66, enabling the extension of exceptions to copyright by regulation, we share the view expressed by John Whittingdale MP in his question at Commons Second Reading of the ERR Bill: Does the Secretary of State accept that copyright is the legal expression of intellectual property rights, and is not a regulation? Is he aware of the widespread concern among the creative industries about clause 56, which will allow copyright to be amended by statutory instrument without full parliamentary debate? Will he assure the House that the Government will not change copyright in that way without proper parliamentary scrutiny?105 The government’s amendment clarifying that this shall extend only to exceptions permitted under the EU InfoSoc Directive106 is welcome—but far from sufficient. For one thing, those exceptions are the sum total of all the diverse exceptions that existed under the multifarious laws of individual EC countries. To enact them all in one piece of legislation would be to reduce copyright to a chaotic minimum—and would, we understand, be a breach of specific commitments made during the extensive negotiations on the text of the InfoSoc Directive. Further, even after this clarification the risk remains that future governments will introduce large “bundles” of changes, further reducing Parliament’s power of scrutiny, which is already more theoretical than practical. The already-woeful standard of impact assessment would be further undermined by such “bundling”. As we said in our response to the government’s consultation on changes proposed post-Hargreaves: If any of these proposals is proceeded with, then a longer period than three months must be allowed to conduct the empirical research requested. The policy of “evidence-based policymaking”—a phrase with which few could quibble as it stands—turns out to be a privatisation of impact assessment. 105 www.publications.parliament.uk/pa/cm201213/cmhansrd/cm120611/debtext/120611–0002.htm#12061114000114 accessed 31 October 2012 106 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri= CELEX:32001L0029:EN:HTML, accessed 02 November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Unless funds are made available to enable vitally interested but financially constrained parties such as the organisations representing individual creators to commission research from organisations such as the Boston Consulting Group,107 then we must request four years, that being the time to propose, fund and complete a doctorate thesis, given a following wind and the gods of the Economic and Social Research Council smiling upon one. We do not believe that the economic case for exceptions has been convincingly made by government in this consultation. In particular government should not assume transfers of value from creators create economic growth, particularly where those transfers go offshore—as to US technology firms— or are merely captured in consumer surplus or lower costs for public or private sector institutions. As an industrial policy the Government, rather than picking winners, is choosing losers in the UK content sectors in the hope of a new, successful economy that exists only in theory. It should do so with great caution. We are concerned, among other things, about the quality of the Economic Impact assessment used in regard to private copying. The Assessment is inconsistent in its argument and uses assertion rather than evidence in its main conclusions around harm to content owners. It has not, for instance, considered the potential effects on licence income from the levy in Europe that is currently repatriated to UK Music Licensing Companies and would come under question if there were no reciprocal arrangements. Its initial assessment, ie that if there is private copying exception there will be minimal or zero impact on copyright owners, is based not on data or evidence, but on a theoretical discussion paper by Hal Varian, the Chief Economist of Google.108 Because of the assumptions underlying the consultation, ie an assertion that copyright is a problem, we believe the document has failed adequately to reflect the benefits of the current copyright regime. The consultation lacks an assessment of the benefits to the economy of copyright. As a consequence it often assumes change that weakens right is positive without assessing the costs of such change to copyright owners.109 Numerical Methods The most egregious fault is in the impact assessments themselves. Where no estimate of cost or benefit is available, it is not appropriate to take the value as zero: this is a fundamental feature of numerical methods (that is, applied number theory). The appropriate value is Not a Number, “NaN” for short. The practical effect of the distinction between NaN and zero is severe and stems from the rules for operations on this special value: whereas £666M—£0 = £666M, £666M—£NaN = £NaN and the same applies to all arithmetic operations.110 The great majority of the impact assessment totals should therefore, have been rendered as NaN. That is to say, in plainer English, that if any calculation contains one or more “don’t know” values, the result of that calculation can only be “don’t know”. If a writer’s projected fee for conducting and licensing an interview with a Minister is £400 including expenses, and they don’t know the fare to get to see her, they don’t know their net income from the piece of work, even if they do know everything else. And thus and so even unto macroeconomics... The Creators’ Rights Alliance proposes that if exceptions to copyright are to be made by Regulation, the only correct procedure is to introduce a separate Regulation for each change to be made. This will allow Parliament to decide whether to approve or to reject each change on its merits, rather than being forced to weigh up a “bundle” which may include several on-balance sensible changes and one that is extremely harmful, or other mixes. 4. Public Lending Right (PLR): The Rental and Lending Directive (2006–115/EC111 replacing the repealed 92/100/EEC) creates a “rental and lending right” under which authors have the exclusive right, subject to limitations, to authorise or prohibit the rental or lending of their works [Art. 2(1)]. The rental and lending right may be transferred. However, even once the rental and lending right is transferred, the author or performer retains an inalienable and unwaivable right to equitable compensation for the rental and lending of their works. The PLR scheme provides authors with a modest payment each time one of their books is borrowed from a public library. PLR is designed to balance the social need for free public access to books against an author’s right to be remunerated for the use of their work. PLR is particularly important to authors whose books are sold mainly to libraries and to those whose books are no longer in print but are still being read. Press coverage tends to focus on a few successful authors, yet most struggle to make ends meet. PLR provides a significant and much-valued part of authors’ incomes. 107 A reference to a report on the general wonderfulness and economic indispensability of the internet, which turned out to have been commissioned by Google. 108 “Copying and Copyright” Journal of Economic Perspectives Volume 19, Number 2, Spring 2005. Hal Varian has worked as a consultant to Google since 2002 109 The preceding four paragraphs are taken, with permission, from an argument developed by the BPI. 110 Standard for floating-point arithmetic (2008), New York: Institute of Electrical and Electronics Engineers, p 34 111 Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32006L0115:EN:HTML, accessed 02 November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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S 43 of the Digital Economy Act 2010112 extends PLR to audiobooks and ebooks “lent out” from library premises for a limited time: but these payments have never been implemented. This is patently unjust and we urge that this provision be brought into force and that extra funds be made available to cover PLR payments for such lending. The amendments in section 43 of in the Digital Economy Act 2010 extend PLR only to audiobook and e- book ﬁles downloaded within the library premises, as downloading from outside library premises may constitute “communication to the public” rather than “lending”—though Amazon appears to differ in its presentation of its recently-launched “Kindle Lending Library”.113 We urge you to recommend the Government to implement s43 without further delay and, if remote ebook lending from libraries is to be authorised, to ensure equitable remuneration to authors in relation to the resulting “communication to the public.” The failure to implement these payments is a clear breach of the Rental and Lending Directive.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this See our observations on the growing difficulty of supporting oneself as an independent professional creator, above. Further, we fully endorse the submissions by others that students should be versed in the essentials of creators’ rights well before they reach further or higher education. Education about the importance of Intellectual Property and the risks of copyright infringement and piracy is essential so that school students—many of whom publish or broadcast more of their own work than do their elders—are empowered students to defend their own rights, honour and reputation. National Curriculum reforms (which will be consulted on in the New Year) to key creative subjects should ensure that the new Curriculum includes the development of an understanding of the principles of authors’ and performers’ rights, their importance to the individual creator and their role in the economy in relevant subjects at Key Stage 3. The proposal for an English Baccalaureate (Ebacc), introduced as a performance measure by Secretary of State for Education Michael Gove in 2010, focuses on five subject areas: Maths, English, Sciences, Languages (Ancient and Modern), and Humanities (defined as only History or Geography). It does not include creative subjects. There are both educational and economic reasons for including both creative subjects and essential features of law and contract relating to them in the English Baccalaureate. The Music Education Council, CBI and Creative Industries Council have all expressed their concerns at the absence of subjects relevant to creativity and the creative industries. This omission should be reversed through the introduction of a sixth pillar of creative subjects. This was suggested in the independent review of Cultural Education authored by Darren Henley, Managing Director of Classic FM, on behalf of the Department for Education and the Department for Culture, Media and Sport. This change would help to ensure that these subjects are valued at all levels. We repeat that we would welcome an invitation to expand upon any or all of these points in oral evidence.

Creators’ Rights Alliance Member Organisations — ABSW Association of British Science Writers — AOI Association of Illustrators — BAPLA British Association of Picture Libraries and Agencies — BASCA British Academy of Songwriters, Composers & Authors — CIOJ Chartered Institute of Journalists — GMG Garden Media Guild — ISM Incorporated Society of Musicians — MU Musicians Union — NUJ National Union of Journalists — PCAM Producers and Composers of Applied Music — PCO Professional Cartoonists’ Organisation — OWPG Outdoor Writers and Photographers Guild — SOA Society of Authors — WGGB Writers Guild of Great Britain November 2012

112 www.legislation.gov.uk/ukpga/2010/24/contents, accessed 02 November 2012 113 www.amazon.com/kindlelendinglibrary, accessed 02 November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the Radio Independents Group Introduction The Radio Independents Group (RIG) is the trade body representing the UK independent radio production sector. The sector is made up of approximately 150 creative companies, spread around the whole of the UK. RIG members represent around 95% of industry turnover, which we estimate as a whole to be some £40 million. These creative companies make radio content for commercial networks as well as BBC networks. They also are engaged in producing a variety of other content for corporate clients, as well as overseas networks and companies. Audiobooks, podcast, museum audio-guides, audio games and other multimedia format are all originated and produced by RIG’s members. It is estimated the sector employs well over 1,000 people, mostly in skilled production roles. The speciﬁc skills developed in the sector are to the gain not only of radio but in all forms of media production where expertise in sound production is required, and therefore the sector, along with the BBC’s own training, provides a crucial skills base for the UK creative industries overall.

The Committee Inquiry RIG welcomes the decision by the Committee to look into the crucial issue of how the creative industries can be encouraged to make the maximum contribution to growth in the UK economy. RIG hopes the Committee finds its views of interest and would be more than happy to have a representative appear before the Committee to discuss these proposals further. We are already engaging with the DCMS Communications Review, including contributing to a panel session at the seminar on radio/audio and growth on 13 September this year.114 RIG notes that the Committee has expressed a desire to focus on “particular sectors as examples of the creative industries, especially the film, music, television, design and games sectors”. We would ask that the Committee also pay attention to those sectors which have similarities but which need the next big step to raise themselves to the level of those aforementioned industries. Film, TV and games have now-powerful voices, the key is not just to continue to help those sectors to grow but to spot those sectors growing around them and ensure the right circumstances are in place for those sectors also to grow. Indie radio producers are responsible for many award-winning regular programmes on BBC and commercial networks. Just a few examples are: “The Ronnie Wood Show” (Somethin’ Else for Absolute Radio); “Gardeners Question Time” (Somethin’ Else for BBC Radio 4); “Fighting Talk” (World’s End for Radio 5) as well as specialist “event radio” like TBI Media’s “Titanic—Minute by Minute”—a BBC Radio 2 special featuring music, readings, and interviews, all around a live timeline of the events surrounding the sinking of the Titanic in 1912. Our members are also engaged in making ground-breaking multimedia content, for example the highly successful “Pape Sangre” interactive audio game. They also contribute significantly to the education sector, the Open University in particular, and bring their professionalism to less visible activities such as the creation and production of museum audio-guides. So there is clearly much potential for producers to use their innovation, creativity and expertise. And being spread all around the UK means indie production companies can provide stories, perspectives, and talent for the benefit of the listeners and licence fee payers. As the UK’s growth strategy moves increasingly to the creative industries, it is important that the UK’s expertise in audio/radio production is part of the story. Indie producers are working to be innovative not just in their content but also in terms of increasing revenue streams. Producers now offer content complete with sponsors to commercial networks. They are also exploring making their content available via online platforms, so that the consumer can buy an increasing number of spoken word and packaged downloads to keep. And indies are exploring new markets—as countries such as India and China continue to grow as markets with an appetite for English language products, the opportunities are arising for more radio network provision. The UK can offer its expertise in programming formats and production to good effect, and grow the fledgling international market for audio formats and programmes.

Speciﬁc Issues Raised by the Committee How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games Much of the talent highlighted in the opening and closing ceremonies was audio-based in the form of some of the UK’s past and present musical talent. 114 http://dcmscommsreview.readandcomment.com/wp-content/uploads/2012/06/Transcript-radio-seminar-amend.pdf, Presentation by Phil Critchlow, Chair, RIG pp30–32. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The ceremonies, not least Danny Boyle’s terriﬁc storytelling opening extravaganza, highlighted British invention and public spirit. This spirit was taken up, now famously, by the Gamesmakers. The UK’s creative industries are similarly driven by the desire to improve people’s lives by making the best content they can, and to make it available to as wide an audience as possible. These twin desires feed the entrepreneurial spirit that characterises the creative industries. Our rich cultural heritage, as highlighted in the ceremonies, is a source of inspiration to indie audio producers, who are already using that rich heritage to create compelling content—from Made in Manchester’s “Turing’s Test”, produced in association with Independent News & Media, to TBI Media’s Sony Gold Award-Winning “The John Bonham Story”.

Barriers to growth in the creative industries—such as difﬁculties in accessing private ﬁnance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector In general there is no doubt that many traditional sources of investment are nervous of the creative industries. The widely-welcomed report Risky Business115 highlighted this issue, and demonstrated that in fact the creative industries are a safer investment than other industries such as restaurants and hotels [check]. “Risky Business” incidentally cited independent radio production as another potential growth area, another reason for the Committee to include the sector within its core focus.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget RIG supports the Government’s decision to introduce tax credits for animation high-end TV and video games. These have been introduced in response to the clear case make that the cost to the Treasury of the tax breaks is compensated for many times over by the increased receipts from the growth in those creative sectors. Whilst there is potential for the UK indie radio/audio sector to grow, the “good news” for the Treasury is that RIG is not pushing for a similar tax break for radio. Our proposals instead involve a more flexible and fair way of using existing public funds, in the form of the TV Licence fee, to act as investment capital for the sector, via the BBC introducing a fair and competitive commissioning system for its radio content. In Television indies can currently pitch for 50% of “eligible” BBC productions. In radio indies can pitch only for a maximum of 20% of eligible productions. “Eligible” excludes such large areas as news and current affairs. Clearly it is a brake on any creative sector to only have access to 20% of the biggest supplier of radio services in the UK. The success of the UK’s indie TV sector emphasises how creative entrepreneurs, given the access to compete fairly for commissions, come up with innovative program formats and talent that are highly successful in the UK and abroad. The BBC is a huge national asset, but in order that it maintains its relevance and efficiency going forward it must re-focus on being fleet of foot and able to adapt quickly to new trends—greater use of independent producers, rather than large unwieldy in-house production houses, is an obvious way for the Corporation to be in the best position to do this. 115 Burrows H, Ussher K. Risky Business. Demos, 2011 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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In a report on BBC radio production supply in 2010, the BBC Trust required the BBC to “demonstrate a clear focus on delivering high quality and distinctive programming to licence fee payers, in particular through ensuring the best ideas are commissioned regardless of source”.116 Although the BBC have opened up some additional radio programming to competition, the total available is only 20%, which still falls far short of the Trust’s stipulation, and RIG asks that the Committee explore this issue as part of its inquiry. Moreover this additional programming is comprised of the lowest value strands on those networks, so that it is bringing almost no new income to the sector. Referring back to “Risky Business” one of the report’s key recommendations was that: “The Government should consider ways that the BBC can encourage creative competition, building on the success of and extending the window of creative competition, not just in TV production, but across all other creative content production (radio, online, gaming) in the next BBC charter renewal. In the meantime, the Government should ask the BBC to do this voluntarily, to stimulate growth in the creative industries.”117 RIG has argued to the Government that there is no need to wait until Charter Renewal to alter the BBC Agreement to introduce such measures now. There are many examples of the Agreement being altered between Renewals, for example the 2003 Communications Act contained a requirement for Codes of Practice to be drown up for indie TV producers—this was mirrored in an alteration to the BBC Agreement made at the time the Act was passed, in order that the requirement to draw up Codes were in place for all PSBs simultaneously. Subsequently to the 2006 Charter there have been several further alterations to the Agreement.118 Taking the argument one step further, RIG was a supporter of Channel 4’s previous “4Radio” initiative. Whilst that did not come to fruition due to the challenging advertising market at the time, it represented a promising new way of commissioning public service radio content and RIG would be keen to explore with others how a similar exercise might be planned for the future, on a more secure ﬁnancial base. This might perhaps involve a combination of funding à la “The Space” project,119 which is joint-funded by the Lottery, Arts Council and BBC.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this RIG contributed views on this area to the Creative Industries Council’s Skills survey last year. In summary RIG stated that: — Creative subjects need to be taught as part of a full curriculum—eg Music, Art, Drama etc. and their relevant to life-skill and the creative industries need to be stressed. On this basis RIG has concerns that the proposed Full English Baccalaureate (EBacc) does not emphasise creative subjects, and is a supporter of the “Bacc for the Future” campaign120 whose aim is to ensure a 6th grouping of creative and cultural subjects is included in the EBacc as proposed by Darren Henley in his recent Review of Cultural Education in England.121 — Radio production should be highlighted as one which can offer a rewarding and exciting career—this must be done as part of a co-ordinated All-Age Careers Service programme which highlights the potential of the creative industries to offer rewarding long-term careers. — Funding should be available for student placements and expenses for production companies to visit institutions at locations throughout the country, particularly as education institutions are cutting back on funding to support these ventures themselves. — Highlighting and promoting those FE and HE providers that offer advanced skills and tuition in radio, audio and multi-platform, and that specialise in the Radio Sector and use a strong professional practice and theoretic basis for their studies. — There needs to be greater awareness of the opportunities within the Independent Radio Production sector—raising the proﬁle of the industry by inviting representation from independent radio producers within the planning of any new initiatives.

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concentrated centres of production (see map). However some of our more remotely located members cite lack of access to high-speed as a severe constraint, so the Government’s planned spread of high-speed broadband will enable creative companies to remain in their chosen location and to continue to give their unique perspectives and stories. Equally, creativity is fuelled by cross-fertilisation of ideas and skills, and having a group of creative companies based in a geographical location has that beneﬁt as well as the obvious one of potentially funding some shared facilities. So whilst “hubs” should be encouraged, this must not be to the exclusion of pursuing strategies that allow independent production companies to ﬂourish regardless of location.

The work of the Creative Industries Council and other public bodies responsible for supporting the sector The Radio Independents Group sought to engage with the creative Industries Council at an early stage. Our experience, echoed by that of others, was the original proposals for working groups were altered at some stage during the process and that not all those originally invited to take part were kept informed. Some work streams were clearly successful, eg that which examined skills, perhaps signiﬁcantly because an existing external organisation, Creative Skillset, was tasked with carrying out the research and make recommendations. RIG commends the work of Creative Skillset in conducting the Skills Survey, but would again point to the need to not only involve in future Government creative skills initiatives those industries which are already strong, but also those that are the next success stories waiting to happen. November 2012

Written evidence submitted by Teledwyr Annibynnol Cymru/Welsh Independent Producers About TAC Formed in 1984, Teledwyr Annibynnol Cymru/Welsh Independent Producers (TAC), represents nearly 50 active independent TV production companies. These companies are primarily involved in the production of programmes and content for Welsh based and other broadcasters and other providers of audio visual services, either as production companies, or in a support capacity. Their combined turnover is in excess of £100 million. Our members diversify into making radio and multiplatform content. As well as being part of the overall UK TV production industry, Welsh TV producers also have speciﬁc issues and concerns which they communicate to UK Government and Parliament, and of course the Welsh Assembly and Government.

The Committee Inquiry TAC greatly welcomes the Committee’s decision to hold this inquiry, as it is a crucial time to look at how the UK’s creative industries can further to contribute to growth. We hope the views expressed below are of interest, and would be happy to submit further supplementary information to expand on any aspect of them if it would be of help to the Committee.

Specific Issues Raised by the Select Committee How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games Significantly, the ceremonies for both Games highlighted the different cultural contributions to the UK’s overall creative excellence of the individual nations within it. One of the UK’s great strengths is its diverse peoples, cultures and perspectives. The cultural value of the Welsh language is recognised by the establishing of S4C in the early 1980s, a public service broadcasting institution which, despite fresh challenges, continues to play a key part in both preserving and growing the culture of Wales and providing a valuable engine for economic growth. So the Government should ensure that it is ensuring that sectors based in the nations and regions are in a position to thrive and, specifically the Welsh language broadcaster S4C is in a position to act as a lynchpin for maintaining and strengthening the Welsh language and culture in Wales and beyond.

S4C Whilst TAC members make content for a range of UK and international broadcasters and corporate clients, a key engine of growth in Wales is Welsh-language broadcaster S4C. As a publisher-broadcaster S4C commissions its content wholly from the independent sector. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Continued funding of S4C should be seen as part of a wider cultural remit to safeguard the Welsh language but also as an investment in the indie sector that drives further growth. So it is crucial that the assurances Government has so far given in relation to the future of S4C are backed up in legislation, in terms of stipulating a guaranteed level of funding that ensures S4C is sustainable. In the 2010 Comprehensive Spending Review, S4C had its funding reduced by a net total of, it is estimated, 42%.122 The organisation has made significant efficiencies, and its previously-established partnership with BBC has contributed to this. The CSR fundamentally altered S4C’s funding arrangements—whereas it had received just over £100 million in a direct grant from DCMS it now receives, though only guaranteed until 2015, £7 million from DCMS. But most of its funding comes from the TV Licence Fee. This development means that the BBC Trust, as the organisation which oversees the spending of the TV Licence Fee, has s role in ensuring that S4C is achieving good value for money. The way that this new relationship works is absolutely crucial to the future of S4C—over-heavy “regulation” could result in its no longer being able to function properly as a separate entity, something which was guaranteed by the Government at the time of the funding settlement. In order to establish this working relationship BBC Trust and S4C recently published a draft operating agreement. TAC has registered its concern that this agreement, whilst containing some positive aspects, fails to adequately set out the clear lines needed between S4C and the Trust and indeed the BBC Executive. Specifically: — Its failure to consistently make clear that it is the BBC Trust, rather than the Executive, that is overseeing the manner in which S4C would spend the part of the Television Licence fee apportioned to it. — Its insistence upon S4C making further significant cuts to expenditure despite S4C already having had a large cut in its funding and implementing significant efficiency savings. — The provision allowing the BBC Trust to “in extremis” withdraw S4C’s funding without having to refer the matter to the Secretary of State for Culture, Media & Sport. — A lack of consistent commitment to S4C’s relationship with the independent production sector. TAC is seeking changes to the draft Agreement to correct these failings, and would welcome the Committee’s support for the changes.

Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector The 2011 report “Risky Business”123 highlighted the fact that the creative industries have an unjustified reputation for being unreliable investment opportunities, whereas in fact compared to some other sectors they are a relatively “good bet”. The Government has a role here in educating the investment sector of the potential understanding that creative industries can be a sound investment. Specifically steps could be taken to establish ways of creative sectors and investors coming together to discuss these matters and create new networks.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget TAC has responded to the consultation on the tax credits. We broadly support them, but argue that as there are specific unique circumstances pertaining to production in Wales, there is an argument for a specific provision with the high-end TV drama concerning S4C commissions. The case made to the Treasury is as follows: 122 www.s4c.co.uk/production/downloads/c_efficiencytargets.pdf—p1 123 Burrows H, Ussher K. Risky Business. Demos, 2011 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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TAC represents the interests of television production companies who alongside content produced for a range of other networks and services, produce programming for the Welsh language channel, S4C. S4C’s remit is to provide a range of programming in different genres which has over the past 21 years included high-end drama and television films. S4C has, as a result of the Government’s Comprehensive Spending Review been required to make a reduction in funding of 30% in real terms. TAC’s producers are concerned that sustaining the production of high-end drama will be very difficult as a result of the reduction in S4C’s core funding and endeavour to attract co-production funding in order to maintain high quality production in the Welsh language. We have seen the success of Scandinavian dramas such as “Wallander”, “The Killing”, “Borgen” and “The Bridge” and aspire to replicate such success. The £1 million per hour threshold however provides no support to achieving this aim; production budgets in the Welsh language are significantly lower. We wish therefore to propose an amendment in the proposed legislation which provides for a model similar to the film tax relief model to apply in relation to UK minority language production of high- end drama with a cost per hour of £500,000. At this level, drama productions solely funded by S4C would not qualify for relief as the funding available would always be below £500,000 per hour. These productions can only be realised with co-production funding from the international markets and tax incentives. Otherwise they are unlikely to be produced. The definition of eligible productions, qualifying “core expenditure” would be consistent with that applicable for English language high-end television dramas with budgets in excess of £1 million.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this TAC has welcomed the work of the Creative Industries Council Skills workstream, and is in dialogue with Creative Skillset to ensure that Welsh production sector is fully engaged with working develop practical skills and training to keep the ﬂow of highly0-skilled production professionals coming to met current and future demand as our industry hopefully continues to grow.

The work of the Creative Industries Council and other public bodies responsible for supporting the sector As stated above, we recognise the work of the CIC and in particular the skills work stream. We would argue that the Creative Industries Council should continue to operate but in a manner that ensures it is allowing all sections of the creative industries to contribute and make sure that not only the biggest voices are heard on a regular basis. November 2012

Written evidence submitted by the Motion Picture Association 1. The Motion Picture Association (MPA) welcomes the opportunity to make a submission to the CMS Select Committee inquiry into support for the creative economy. 2. The UK has one of the strongest content sectors in Europe and the Government has a key role to play in setting a regulatory and tax environment to attract further investment into the creative sector, which has been remarkably successful for many decades. 3. This is a timely inquiry as the Government has recently made a number of regulatory changes, particularly on copyright, which could affect the audio-visual sector quite considerably. These changes deserve scrutiny from parliamentarians if they are to be implemented correctly.

Introduction 4. The Motion Picture Association is the international trade association which serves the interests of the six major international producers and distributors of ﬁlms, home entertainment and television programmes (Paramount Pictures Corporation, Sony Pictures Entertainment Inc, Twentieth Century Fox Film Corporation, Universal City Studios LLC, Walt Disney Studios Motion Pictures and Warner Bros. Entertainment Inc.) Our cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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members have been established in the UK for many decades, investing consistently in production and distribution. They have a deep understanding of the creative economy in the UK and a strong interest in its good health. 5. Our members are active across the European Union as well as in the US and globally—and are key contributors towards the nearly 1.5 million jobs across the UK creative industries. 6. MPA member companies produced more than 70 ﬁlms and television programmes in whole or in part in the UK in 2010, with more than £740 million spent locally on those productions. Beyond its direct and indirect contributions to the economy the ﬁlm industry plays a key role in exporting British talent and crews worldwide and secures the country’s position as a global creative hub.

Summary of MPA Key Points 7. The MPA wishes to address a number of issues raised by the Committee in its call for evidence. In particular issues relating to: — The extent to which the right taxation environment can support the growth of the creative economy. — The impact on the creative industries of the Hargreaves Review of Intellectual Property (IP) and Growth, the Government’s response to it and the implementation of the Digital Economy Act (DEA). 8. The MPA welcomes the Government’s proposal to introduce tax incentives for video game, animation and television production. This approach provides important and valuable support to the film production sector in the UK and should have similar beneficial effects in these other sectors. 9. The ultimate effect of the Hargreaves Review of Intellectual Property is not yet clear, but it can at least be seen that the process, conclusions and subsequent consultations have damaged rightholder confidence in the ability of the UK Intellectual Property Office (IPO) to manage policy for the copyright sector. While the Government has taken some steps to begin to address the problem of copyright infringement, the Review has ignored this major obstacle to growth in the audiovisual sector. However, the MPA values the work of Richard Hooper on the feasibility of creating a Digital Copyright Exchange in the UK and will continue to support the ongoing work on the proposed copyright hub. 10. The attempt to legislate for copyright exceptions by Statutory Instrument in the Enterprise and Regulatory Reform Bill has caused uncertainty and concern to rightholders. While the Government is to be applauded for listening to rightholder concerns, more consideration of the affected sectors’ views prior to the publication of the proposals would have produced better policy. Any exercise of the power to alter exceptions by secondary legislation should proceed by way of separate instruments and impact assessments for each exception. 11. The length of time taken to implement the Digital Economy Act 2010 is causing substantial continuing loss to the copyright sector and the UK economy in general. The MPA would urge that the processes envisaged under the Act be brought into effect quickly, and that the costs are kept as low as possible so as to ensure maximum participation from rightholders.

MPA Response to CMS Select Committee Call for Evidence The extent to which the right taxation environment can support the growth of the creative economy 12. As the Committee will be aware, the cost of making films and high-quality television programmes is high. Inward investment by non-domestic film companies is prized, on account of the positive multiplier on the local economy and its contribution to the creation of a sustainable film production infrastructure. In recognition of the important cultural and economic contribution made by the sector and its particular characteristics, tax incentives are commonly used across the globe to support sustainable film production. The MPA participated in the discussions with the UK Government leading to the UK film tax credit, which came into effect in January 2007. We are grateful that the present Government has continued this provision, which has provided a strong incentive for our member companies to maintain their historic investment in the UK. Indeed a BFI commissioned report ,by Oxford Economics, assessing the Economic Impact of the Film Industry states that the core UK film industry will attract between 6% and 8% of global film production over the period to 2015, with much of that from MPA member studios. Spending on inward investment is set to maintain or better its record 2011 level of £1 billion per year. The report also estimates that overall UK film production might be reduced by 71% were there no Film Tax Relief. 13. We therefore applaud the Government’s proposal to introduce a similar tax credit for animation, television production and video games. The MPA’s member studios are prominent in all three fields. Apart from the benefit to the local economy, international productions provide opportunities for the local workforce to improve their skills and be exposed to the newest techniques of production. An application of the tax credit concept to this wider field is welcome and in our view will promote further growth in the UK and wider European creative economy. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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14. From a broader business perspective, long-term commitment to such measures by the Government is essential. The ongoing and proven support of the UK Government for the ﬁlm sector has helped to underpin, for example, the decision by Warner Bros. to invest more than £100 million in the purchase and redevelopment of Leavesdon Studios, which opened earlier this year.

The impact on the creative industries of the Hargreaves Review and the implementation of the DEA Impact of the Hargreaves Review 15. The high-level objective of the Review—to encourage growth in the UK economy through improvements to the IP system—was praiseworthy. However, the MPA shares the concerns of many other representatives of the content industries that many of the Review’s specific proposals were ill-considered and backed by inadequate cost-benefit analysis—or indeed no analysis at all, notwithstanding the Review’s call for fact-based policy making. It is clear that some of the proposals such as the abolition of certain educational licensing schemes and the removal of the ability of publishers to license non-commercial data-mining are part of a strategic effort from search providers to extend the privileges provided by the E-Commerce Directive, so as to insulate their businesses from liability in general. We have urged the Government to be careful to ensure that in addressing the narrow issue of non-commercial data-mining it does not upset the balance created by the E- Commerce and Copyright Directives. 16. It was disappointing that the Review and subsequent consultations more or less turned their backs on the problem of copyright infringement. Intellectual property theft is a major obstacle to growth in the creative economy in the UK, as elsewhere. Indeed, it is particularly important at a time of technological change, when the returns from new modes of distribution are still small, that copyright content is strongly and consistently protected. There is a great deal of work to be done to improve the practical protection of copyright in the UK. 17. While, the UK IPO raised concerns about data compiled by industry as “lobbynomics” and claimed that there was little reliable data to guide policy, the Review then proposed substantial changes to copyright law. This reversal of the burden of proof strikes us as inconsistent with the principle of evidence-based policy making. 18. Some of the changes suggested during the IPO consultation process have the potential to profoundly impact the entire content sector. Indeed the work of the IPO more generally is very important to MPA member businesses and we believe it should be more accountable to Parliament via regular and transparent reporting of its activities, both in the UK and in WIPO to ensure that confidence in the IPO remains strong. 19. Also the MPA firmly believes that responsibility for the formulation of policy should ultimately rest with government ministers; in particular with the one IP minister with overall responsibility for IP strategy and policy across Government. The MPA believes that a strong IP minister, driving an approach to IP policy based on maximising the economic value underpinned by a robust IP framework, would be best placed to ensure the IPO focuses on this core priority. 20. However, we welcome the work done by Richard Hooper, following on from a recommendation of the Hargreaves Review, to assess the feasibility of creating a Digital Copyright Exchange. This was a well-run enquiry in which we felt that our members’ knowledge and expertise were of genuine interest to the inquiry team. The MPA will continue to support the work on this project in the hope that a worthwhile copyright hub can be developed in the UK.

Changing copyright law without primary legislation 21. In order to make policy in a constructive and efﬁcient way, Government needs to engage with the parts of industry most closely affected by its decisions. The traditional process of developing legislation through consultation papers and Green and White Papers works well to ensure that all interests are taken into account. 22. The proposals on copyright contained in the Enterprise and Regulatory Reform Bill touch upon complex areas of the law. They were put forward with very little consultation with affected sectors. Clause 66 of the Bill (as it now is) proposes that copyright exceptions may be changed by Statutory Instrument. Given the lack of discussion with interested parties beforehand, it is not surprising that this proposal caused considerable concern to rightholders. We welcome the fact that the clause has been clariﬁed to meet the concerns of many (though not all) rightholders. 23. We would recommend, however, that if copyright exceptions are to be introduced by Statutory Instrument, each exception should be the subject of a separate Instrument, each with its own impact assessment, so as to allow for a meaningful debate as to the suitability of each proposal. 24. This episode indicates that the attempt to simplify the legislative process by use of secondary legislation can produce bad proposals and confusion. These contribute to uncertainty, a situation which is always damaging to business and investment. As with the Hargreaves Review, there seems to be a new tone of hostility on the part of Government towards the existing legal regime—which has in fact produced a strong creative sector in the UK and high levels of inward investment. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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25. The MPA has enjoyed a very productive and mutually respectful relationship with UK governments over the years. We have had confidence in the UK as a place where our members’ businesses would receive sensible consideration, given our common interest in achieving good conditions for the production and commercialisation of films in the UK. Our experience of the Hargreaves Review and what has since followed has made it less easy for us to be so confident.

Failure to implement the Digital Economy Act 2010 26. The MPA recognises and appreciates the efforts of Government and Ofcom to implement the Digital Economy Act 2010. It has to be admitted, however, that the time it has taken even to get as far as we have does not compare well with the progress of similar schemes in France and New Zealand. 27. The effect of the delay has been—obviously—to expose rightholders to larger losses from copyright infringement in the UK than they otherwise would have incurred. Survey evidence has repeatedly indicated that a substantial proportion of infringing users of file-sharing systems will modify their behaviour in response to warnings of infringement. A recent study of the French HADOPI system on behalf of IFPI has produced convincing evidence that such “graduated response” schemes have stimulated the growth of legitimate sales of music in France. The most recent evidence we have (from 2011 by IPSOS-MORI) shows piracy was responsible for an estimated £511 million of losses in the film and television industry in 2011. A 2009 study by Oxford Economics for Respect for Film (a UK representative body for the audio-visual sector of which the MPA was a member) indicated that the annual saving for film and television rightholders would be £142 million, were a graduated response system introduced in the UK. 28. The MPA would urge that the principles and processes enumerated in the Digital Economy Act be brought into practical effect as quickly as possible and that every effort be made to ensure that the cost of using the system be kept as low as possible, to ensure maximum participation by right holders. 29. We also support improvements to the judicial system to allow site blocking orders to be obtained more efficiently under section 97A of the Copyright, Designs and Patents Act 1988, especially taking on board the High Court decision requiring a number of ISPs to block access to the pirate website Newzbin2. 30. Likewise, we support Government’s efforts to tackle online copyright infringement including addressing the activities of rogue websites, reducing the potential for consumers to be led to illegal sources of content by search engines and attempting to involve online payment processors, as well as the online advertising industry with which discussions are well advanced. We strongly welcome these discussions which the MPA are pleased to be part of. We would suggest that, as with the introduction of codes of conduct for collecting societies proposed in the Enterprise and Regulatory Reform Bill, a “back-stop” legislative power to impose codes of conduct on such commercial operators would hasten agreement on fairer and more effective burden-sharing in this area. November 2012

Written evidence submitted by the Creative Coalition Campaign Introduction 1. The Creative Coalition Campaign (CCC) welcomes the opportunity to make a submission to the Culture, Media and Sport Committee’s inquiry into support for the creative economy. The CCC is a partnership comprising trade unions representing workers in the creative industries, trade organisations and businesses in the music, video, ﬁlm, TV, publishing and sports sectors. We have come together to articulate our member organisations’ shared view of the threat that online copyright infringement poses to jobs in the creative industries and to promote the continued success of the sector. 2. Copyright is a fundamental cornerstone supporting creativity of all kinds as it enables creators to monetise their creative talent. This in turn allows reinvestment in new innovations and creative content which supports a large and vibrant creative economy; the creative industries employ 1.5 million people and contribute more than £36 billion to the economy. The creative industries are recognised as a key growth sector, much of which is derived from exports. However, without copyright there would be no creative economy. 3. As such, it is our view that retaining a robust intellectual property (IP) system with strong copyright protection both online and ofﬂine is a pre-requisite to ensuring a healthy creative economy. Conversely, we also believe that some of the changes to the UK’s IP system, proposed by the Hargreaves Review and being taken forward by Government, have the potential to weaken intellectual property rights and enforcement. This could undermine the basis of a sustainable creative economy and exacerbate the problem of online copyright infringement—already a major barrier to growth for creative content producers. We are particularly concerned about proposals for new exceptions for personal use, parody and data and text mining.

Hargreaves 4. This submission outlines several areas of disagreement and concern that CCC members have with the elements of the approach and recommendations of the Hargreaves Review. However, it is important to note cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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that the Review contained a number of recommendations which we believe to be entirely sensible and are willing to work with Government and others to implement. 5. For example, the recommendation for a voluntary Digital Copyright Exchange, which was thoughtfully developed by Richard Hooper, has led to industry figures agreeing to support the development of a “copyright hub”. We believe this industry-led approach is the most effective way of ensuring that copyright licensing is as efficient and usable as possible in the digital age. It is also important to acknowledge the valuable work undertaken by Richard Hooper on his feasibility study which helped to kick-start its implementation. We also welcome the introduction of the new small claims track in the Patents County Court (PCC) as recommended by Hargreaves Review. 6. Unfortunately however, we believe that narrow terms of reference and a policy backdrop with pre-existing assumptions about the nature of copyright and creative content resulted in Hargreaves’ final recommendations being unbalanced and potentially damaging to growth in the UK’s creative industries. In particular, CCC members hold concerns around proposals for new, loosely defined, copyright exceptions based on flawed assumptions that they would act as a catalyst for economic growth. 7. It is our belief that the Hargreaves Review was carried out against the background of a pre-existing assumption that the UK’s intellectual property and copyright framework acted as a barrier to growth, particularly for what has come to be termed “tech” companies. Indeed, this is reinforced by comments in David Cameron’s speech in which he announced the Review: “The founders of Google have said they could never have started their company in Britain ... they feel our copyright system is not as friendly to this sort of innovation as it is in the United States ... So I can announce today that we are reviewing our IP laws, to see if we can make them fit for the internet age.” 8. Hargreaves claimed that “copyright law has started to act as a regulatory barrier to the creation of certain kinds of new, internet based businesses”. We do not accept this claim, nor the implicit attitude which sees copyright as a regulation. It is our belief that issues such as access to finance and attracting people with sufficient skills are the main significant factors which prevent small and medium enterprise (SMEs) (tech, content or otherwise) from starting and growing. We believe Hargreaves’ conclusion is partly the result of the terms of reference he was working to which specifically discuss IP in the context of it being a barrier to growth. We believe this contributed to the Review’s conclusions failing to acknowledge the broader picture both regarding barriers to growth for SMEs and of the importance of IP as a driver of, not a barrier to, economic growth.

Content Drives Growth 9. Much of the public debate which surrounds copyright and IP issues is characterised by false or misleading caricatures of the main organisations and industries involved. This is often seen as a “content vs tech” debate with big film studios and music labels on one side and big search engines and social media outlets on the other. This simplistic view fails to recognise a much more complicated and fluid reality. 10. Creative content producers constantly utilise and develop new technology to aid their work; the UK is home to some of the most advanced CGI facilities in the world and content creators are driving innovative new technical innovations allowing people to access content in new ways such as UltraViolet. In addition, there are many small, independent and innovative companies across the creative sector making TV programmes and films, producing music, publishing books and much more that all rely on copyright. 11. Conversely, many large “tech” companies such as Google are now investing significant amounts in original creative content and it is that very same content that drives demand for their services and takes up an (increasing) majority of demand for bandwidth across the internet. The reality is that both the technology and creative sectors are part of an interconnected eco-system which relies on high quality creative content to thrive. 12. It is therefore more helpful to instead consider the question from a different perspective; how can we ensure that the flow of creative content continues to create benefits for all players in the digital eco-system? Copyright provides a financial return for creators and investors in creative content. This then allows these people to innovate and re-invest in new content, thereby ensuring a steady flow of high quality content. Demand for content also drives take up of technologies used to access content. Content is a complement to technology not a competitor. 13. Hargreaves’ recommendations arise out of a failure to consider this broader perspective. The assumption that making it easier and cheaper to access and use creative content will lead to economic growth is based on a static view of this content. If you remove or weaken the ability of creators and rightholders to reinvest in new content, then quality content will not continue to be made in the UK and will not therefore be available for anyone to license at any price for any use.

Evidence 14. The CCC also shares considerable concern regarding Hargreaves’ comments about the evidence relating to copyright and IP related policy making. We agree whole heartedly that “Government should ensure that development of the IP system is driven as far as possible by objective evidence”. Unfortunately Hargreaves cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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does not himself appear to follow this principle. We also believe it was misguided and unfair to dismiss economic evidence provided by industry as “lobbynomics”. Like many other sectors, the creative industries are keen to work with Government to ensure policy decisions are as well informed as possible, particularly when industry is well placed to provide insight into topics such as the damage caused by online copyright infringement. It is in this spirit that evidence has been submitted to Government in the past and we believe it is a mistake to take such a dismissive tone regarding the research provided (and often commissioned independently) by industry. 15. Furthermore, we believe there are significant questions regarding the evidential basis for many of Hargreaves’ own recommendations and to the impact assessment published alongside the subsequent Intellectual Property Office (IPO) consultation. This is particularly illustrated by a report from Oxford Economics which was commissioned by the Alliance for Intellectual Property. The report identifies a failure to fully consider the impact of proposed changes on content producers and a pre-existing assumption that the current IP framework is economically inefficient. We do not feel that these concerns have yet been adequately considered by the Government and hope that they will do so before publishing their final policy statement, specifically by providing new and individual impact assessments relating to each of their proposals. 16. It is our belief that, given the importance of intellectual property in supporting growth in the creative economy, any changes or new exceptions should be made only where there is a clear and fully evidenced case for doing so. We do not believe the case for many of the changes advocated by Hargreaves and the Government has been sufficiently evidenced. In particular, we have seen no substantiated evidence as to who benefits from weakening copyright protection.

Copyright Exceptions 17. As regards the Enterprise and Regulatory Reform Bill, CCC members are now content with clause 57 following Government amendments clarifying that no new exceptions can be introduced outside the scope of European law, although there are some rightholders who believe further clariﬁcation or amendment is necessary. The CCC holds a greater concern regarding how any further potential changes to copyright exceptions, using either this mechanism or the European Communities Act (which also allows exceptions to be amended via secondary legislation) are introduced. We are concerned that the Government may seek to “bundle” future changes to copyright exceptions into a single Statutory Instrument (SI), thereby making it impossible for Parliament to accept or reject only certain aspects of reform. 18. We strongly oppose this and think any changes need to be brought in via separate SIs and accompanied by individual impact assessments. Bundling changes into one SI would not allow the varying impacts of such proposals on separate creative sectors to be appropriately taken into account. We believe the Government should make a commitment that any proposed changes to copyright exceptions will receive the individual scrutiny and consideration that they (and the rightholders they will affect) deserve.

Digital Economy Act 19. Two years after the Digital Economy Act (DEA) was passed in May 2010, the CCC welcomes further moves to implement measures designed to protect copyright and promote the creative economy. In particular, we welcome the publication of the Draft Initial Obligations Code and Costs Statutory Instrument by Ofcom in June. This crucial step brings us closer to full enactment of the notice-sending system created by the DEA which is necessary to tackle the prolific problem on online piracy. 20. International examples support the case for a notice-sending system; similar systems in France, the US and New Zealand have reduced the level of online piracy. In its first two years of operation, the French HADPOI agency which administers the notice-sending system sent 1.15 million first-round notices, of which only 102,854 resulted in a second-round notice. In New Zealand, the incidences of top-200 movies being viewed illegally more than halved in the first month of a notice-sending system—falling from 110,000 to 50,000. These examples demonstrate that an effective notice system both has an impact on piracy levels and changes consumer behaviour, given that its primary function is to provide education and advice about copyright and where one can assess legal services. 21. The CCC recognises that Digital Economy Act implementation was significantly delayed by the Judicial Review process. However, we remain concerned about continued delays to implementation and call on both Ofcom and Government to work to ensure its continued smooth progress. In addition, we believe it is important to keep the costs of the notice sending process to a minimum. The success of the scheme depends on both the efficiency of the processes and widespread participation by rightholders. In particular, we are concerned that high costs will, at least initially, act as a deterrent to smaller rightholders and limit participation. 22. More generally, the costs of notice-sending should be kept to a minimum to maximise the number of notices sent; this will be important to effectively tackle the proliferation of infringement and also to achieve maximum impact in changing consumer behaviour. CCC members continue to work with Ofcom and the Internet Service Providers (ISPs) to try and ensure the system is implemented as efficiently and effectively as possible and we call on Ofcom to explore every avenue to keep the costs at a reasonable level. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Websites and Intermediaries 23. It is important to view the DEA as an important part of a wider, emerging framework to tackle online piracy. This framework includes legal action to block access to websites illegally hosting copyright infringing material. The use of section 97A of the Copyright, Designs and Patents Act is a viable way to enforce copyright laws which has been tried and tested in the Courts and has now been successfully used by both the Motion Picture Association of America (MPAA) and the BPI in two cases. However, it is important that this mechanism can now be developed so that it can be used quickly and efﬁciently, whilst still retaining thorough judicial oversight. To this end we believe an expedited process should be created, based on the legal principal and precedent set by the recent cases. Such reforms would to enable illegal sites to be shut down much quicker and in greater volume. 24. This framework should also include steps to engage with intermediaries, including ISPs, websites and search engines, and also education programmes to encourage behaviour change amongst consumers and promote continual growth and the use of legal content sources. We also welcome efforts by the Department for Culture, Media and Sport to engage with various third parties on these matters. In particular, we appreciate the support of the Minister for Culture, Communications and the Creative Industries whose roundtable meetings, looking at issues including advertising revenue streams and the role of search engines, have demonstrated a willingness to engage with industry concerns. 25. The CCC has long been concerned by the prevalence of pirate sites appearing in search rankings. We welcome recent moves by Google to alter its search algorithm to take into account the number of removal notices served against sites by copyright owners, which is intended to decrease the prominence of pirate sites in search listings. We hope all search engines will engage constructively with creators moving forward on how best to protect and promote creative content online. While CCC members will monitor the impact of the changes, it is important that Government remains engaged; should Google’s changes fail to have the intended impact, the Government should support further action to ensure that consumers are directed ﬁrst and foremost to legitimate, legal sources of content.

Development of the Legal Market 26. Another important aspect to tackling online copyright infringement is developing the legal market in digital creative content and it is important to recognise the considerable progress made on this front in recent years. The UK is one of the world’s most advanced markets for creative content online in the world. There are well over 70 services legally offering music and almost 50 digital video and TV catch-up services including iTunes, Blinkbox, Xbox Live, Netflix, Lovefilm, BBC’s iPlayer, and 4oD to name a few. 27. Furthermore, a recent report by the Competition Commission highlighted the exciting progress being made in the legitimate online market for pay TV, highlighting the success of Netflix, LoveFilm and the launch of Sky Movies on Now TV. These findings offer compelling evidence of the growing strength of the legitimate digital market for films.

Education 28. The maintenance of a strong and accepted framework of IP rights will need to be supported by continued education about the importance of IP and the risks of copyright infringement. We welcome moves by the creative industries to lead this education process, such as the Industry Trust’s Screen Thing initiative. We would like schools to contribute to this education process and hope that, following the impending reform of the National Curriculum, pupils will be able to gain an understanding of the principles of intellectual property, its importance and its role in the economy in relevant subjects at Key Stage 3. 29. Growth in the creative economy ultimately depends on the continued existence of consumers who appreciate and value creative content. We welcome action taken by both industry and government to promote cultural and creative activities to the public, such as the work of Film Education in coordinating the National Schools Film Week and the Film: 21 Century Literacy Strategy. However, we are concerned that creative education risks losing out in the wider picture. The omission of rigorous creative subjects from the new English Baccalaureate qualiﬁcation is a worrying trend and we call on the Department for Education to review this move. We would particularly draw attention to the ﬁndings of the independent review commissioned by the Department for Education and the Department for Culture, Media and Sport on Cultural Education authored by Darren Henley, Managing Director of Classic FM. We support Henley’s strong defence of the value of cultural education and his call for its inclusion in the National Curriculum and English Baccalaureate. This change would help to ensure that creative industry relevant subjects are valued at all levels.

Conclusion 30. The creative economy is underpinned by intellectual property, which provides a sustainable model for driving innovation and growth by allowing reinvestment in new content. In order to support the creative economy Government must maintain our robust yet ﬂexible intellectual property framework and ensure that it is enforced both online or ofﬂine. Threats to the intellectual property system, whether from widespread online cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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copyright infringement or from poorly thought through policy proposals, represent the most signiﬁcant threat or barrier to growth in the creative economy. 31. We believe that in order to best promote growth in the creative economy it is essential to retain a robust and enforceable intellectual property system. This means at the very least: ensuring that any changes to the system should be properly evidenced and any new exceptions should be scrutinised individually on their own merits; Ofcom, Government, rightholders and ISPs working together to implement the DEA as quickly, efﬁciently and cost effectively as possible; Government continuing to engage in and promote industry led efforts to ensure intermediaries (search engines, payment processors and advertisers) play their part in tackling online infringement; and encouraging the continued growth of the legitimate digital market for creative content. November 2012

Written evidence submitted by the Incorporated Society of Musicians 1. The Incorporated Society of Musicians (ISM) is the UK’s professional body for musicians. We champion the importance of music and protect the rights of those working within music through a range of services, campaigns, support and practical advice. We are a wholly independent, non profit-making organisation. Without political interference or financial imperatives we express robust and authoritative views which champion both music and professional musicians. 2. Our members come from all branches of the profession—performers and composers working in a variety of different disciplines and genres; private, peripatetic and classroom music teachers; academics, advisers, music managers, music technology professionals, music therapists, and music administrators. 3. We also have other levels of membership for students and those just starting out in the profession as well as for bodies such as schools, conservatoires and orchestras and those who simply want to support our work as advocates of music. 4. Our diverse corporate membership of over 100 organisations includes a significant number of education institutions including all the UK music conservatoires, several universities and specialist music schools. It also includes the Association of British Orchestras (ABO), Yamaha, Classic FM, the Associated Board of the Royal Schools of Music (ABRSM), Trinity Guildhall, the International Artists Managers Association (IAMA), the Royal Philharmonic Society, the Music Industries Association (MIA), Oxford University Press (OUP) and other publishers as well as one of the leading contemporary classical record companies.

About this Submission 5. The ISM is a member of the Creators’ Rights Alliance (CRA), British Copyright Council (BCC), Creative Coalition Campaign (CCC), the Educational Recording Agency (ERA) and Council for Subject Associations (CfSA). 6. Our submission should be seen as complementary to submissions from any of these organisations.

Strategy and Economic Signiﬁcance 7. Policy making for the creative economy must be joined up and considered as a whole. As an example of where this has not happened, we ﬁnd it puzzling that, on the one hand, the Department for Education should omit music from the English Baccalaureate whilst on the other hand, the Creative Industries Council, Chaired by Vince Cable and Jeremy Hunt (the then Culture Secretary), should criticise the omission of creative industry relevant subjects—such as music—from the EBacc league table. A joined up approach between the creative economy, intellectual property and education is needed to ensure that a skilled workforce is developed and a sustainable creative economy is maintained. 8. The economic value of the creative economy is well recognised and we will not repeat the wealth of data available. However, we strongly recommend the committee consider the Performing Right Society (PRS) for Music report Adding up the UK music industry124 and the UK Music report on tourism.125

Intellectual Property 9. We support the submissions by the Creative Coalition Campaign of which we are members and the Creators’ Rights Alliance, of which we are also members. 10. Copyright protects the value of creators’ works. This value is what enables individuals to work as creators, receive remuneration for their work and contribute to the economy. Creators are a key driver of growth. At its heart the creative economy must enable individual creators to beneﬁt from their work. The content produced by creators drives growth; the ability to exploit their own work is crucial to a sustainable creative economy.

124 www.prsformusic.com/aboutus/policyandresearch/researchandeconomics/Pages/default.aspx 125 www.ukmusic.org/research/tourism-research cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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More Copyright Investment Creativity content

11. This accords with the IPO’s recognition that “without copyright protection British creators and creative industries, from film directors to video game developers, would have less incentive to create new works, to the detriment of the UK’s culture and economy.” 12. With regards to copyright exceptions the potential damage caused by creating arbitrary exceptions to copyright—as proposed by Hargreaves, and the undermining of copyright by a growth in exceptions would be directly damaging to individual creators as well indirectly, through the message it would send out. 13. Copyright should not be seen as red-tape; it is a long established mechanism for the protection of property rights in respect of the work created by creators. The music world is a complex interconnected world where creators work closely with performers and educators. It is a delicate balance and any undermining of copyright would inevitably undermine this complex ecology. The teacher in the classroom through the use of licenses to use copyright material stimulates the creativity of our school children. In time some of these pupils will develop into creators in their own right, creating their own content to be exploited and generate wealth. The interconnectedness between these different worlds is something we constantly see at the ISM and needs to be nurtured and not undermined by proposals to extend exceptions to copyright. 14. Echoing a point made by Mike Holderness at a Westminster Forum, we would point out that, with the advent of 3D printing, the importance of intellectual property will extend far beyond the current creative economy to any item which can be copied and replicated many times over. With this in mind, the Hargreaves assumption that the current IP framework is flawed is not acceptable, and the view that IP protection such as copyright is regulation is also unacceptable. 15. Evidence is crucial to these discussions and the evidence base for some of the proposed changes from the Hargreaves Review of Intellectual Property is flawed. We would also direct the committee’s attention to the Oxford Economics report commissioned by the Alliance for Intellectual Property. 16. Technology is crucial to music education, as highlighted in a recent subject report by Ofsted. The proposals to exempt education institutions from licensing are not keeping up with developments and putting at risk the need for solutions to be “future-proof”. 17. The right to remuneration—regardless of what a work is being used for, or who is using the work—is a vital component of the music professional’s income. Many of the problems identified originally by Hargreaves are either not problems or are being tackled by collecting societies and the creative industries already in a voluntary manner. As such, our response to many of the proposals is that the current situation, in which lots of activity is being undertaken, is suitable. It is inaccurate of the Intellectual Property Office consultation, to suggest that there is an option to “do nothing”. 18. Some of the proposals in the Intellectual Property Office consultation would undermine the ability of musicians—many of whom are already on low incomes—from being able to protect and receive proper remuneration for their own creative endeavours. In turn, this would undermine growth by reducing incentives for creativity within this central part of the economy.

Education Policy 19. Will Page, former Chief Economist for PRS for Music, writing in the ISM’s Music Journal (November/ December 2011): “Music is one of the few genuine export success stories the UK can claim ... the question is this: against a backdrop of falling sales, who is putting the time, money and expertise into developing the arena, festival and stadium acts of the future.” 20. The English Baccalaureate (EBacc) league table was introduced by the Secretary of State for Education in 2010. The table ranks schools by attainment in the five subject areas of Maths, English, Sciences, Languages (Ancient and Modern), and Humanities (defined as only History or Geography). It does not include Music or any other creative/arts subject. 21. It is now proposed that the full English Baccalaureate will be awarded to pupils who have achieved a certificate in all of the five subject areas. It does not include Music or any other creative/arts subject. New English Baccalaureate Certificates have been proposed which will initially be created for the five subject areas but could eventually be extended to other subjects. These proposals were introduced by Michael Gove on 17 September 2012. The consultation ends on 10 December. 22. The first and second of these initiatives will steer pupils to study particular subjects and create incentives for schools to narrow the range of subjects on offer. This is having a negative impact on uptake in these subjects. 23. In September 2011, the ISM conducted a survey of its teaching members working in and out of schools. We had 543 respondents in total with 300 respondents to the questions on the impact of the EBacc. The results were as follows: cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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What impact has the introduction of the E-Bacc had on music education since its introduction at the beginning of 2011? A very harmful impact 17.8% A harmful impact 42.0% No impact 39.2% A positive impact 1.0% A very positive impact 0.0%

Of those responses: 76.5% cited fewer pupils selecting music at GCSE 51.8% cited a change in attitudes from other teachers 27.1% cited timetable changes 26.7% cited stafﬁng changes

24. Figures126 show that 46,368 students took GCSE music in 2012 in England, Wales and Northern Ireland, down from 48,099 in 2011. In England the decline is from 43,127 in 2011 to 41,511127 in 2012 and we have further anecdotal evidence if desired by the committee. The Department for Education’s own research128 supports these ﬁndings.

25. The CBI and Creative Industries Council,129 have already expressed concern over the absence of creative and cultural subjects from the EBacc league table. Higher education institutions such as Trinity College, Cambridge130 back a broader range of subjects and why the Russell Group advice131 on post-16 qualiﬁcations— which can be misunderstood or misrepresented—also states that “there are subjects, like economics and music, which are highly regarded by [their] institutions.”132

26. We would like to draw the Select Committee’s attention to the Bacc for the Future campaign and the broad coalition of support133 it already enjoys from organisations including the BPI, Dance UK, Exhibition Road, Shakespeare’s Globe, Music Industries Association, UK Music, National Drama and the National Society of Education in Art and Design.

27. It is our conclusion that the EBacc must include a sixth pillar of creative subjects if it is to support the creative economy.

28. This solution is backed by Darren Henley. Darren was appointed by Michael Gove to lead a review of music education in September 2010. In the Review of Music Education134 which was published in February 2011, Darren Henley said that “music should be included as one of the subjects that go to make up the new English Baccalaureate” to avoid a “risk that the subject may be devalued”. In his subsequent Cultural Education Review,135 he argued for “the creation of a sixth grouping of subjects [to be] included in the English Baccalaureate ... to create a generation of fully rounded individuals.”

Live Music

29. The implementation of the Live Music Act is wholly welcome and will resolve many of the concerns around the Licensing Act 2003 which had, as the committee is aware, caused a great deal of difﬁculty for many musicians. The ISM has submitted a substantial amount of evidence regarding this policy and we are delighted that the Act was ﬁnally implemented on 1 October 2012.

Conclusion

30. The creative economy should be regarded as a single entity and education policy should reﬂect the priority rightly placed on the creative economy by the current Government. Government should also ensure that the bedrock of the creative economy, namely, intellectual property and the ability to proﬁt from one’s work is not undermined by unnecessary, counter-productive or ill-informed proposals to reform copyright protections. November 2012

126 www.rhinegold.co.uk/magazines/music_teacher/news/music_teacher_news_story.asp?id=1541 127 www.jcq.org.uk/ 128 www.education.gov.uk/publications/eOrderingDownload/DFE-RR249.pdf 129 www.culture.gov.uk/news/news_stories/8808.aspx 130 www.trin.cam.ac.uk/index.php?pageid=604 131 www.russellgroup.ac.uk/media/informed-choices/InformedChoices-latest.pdf 132 Source: Informed Choices Video, 2:38, available at www.youtube.com/watch?v=54kKLOkoFxk&feature=youtu.be 133 www.baccforthefuture.com/supporters.html 134 www.education.gov.uk/publications/eOrderingDownload/Music%20Education%20in%20England%20-%20Review.pdf 135 www.culture.gov.uk/images/publications/Cultural_Education_report.pdf cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w96 Culture, Media and Sport Committee: Evidence

Written evidence submitted by the Children’s Media Foundation Introduction The Children’s Media Foundation (CMF) is a not-for-proﬁt organisation focused on the media diet of UK children and young people. It is the successor to two previous organisations—the Children’s Film and Television Foundation and the Save Kids’ campaign. It promotes better awareness and understanding of the issues around children and their use of media, in particular the content that is made for them. It partners with the academic and commercial research communities to focus and disseminate research of value in the public discourse. It lobbies for support for children’s content production in the UK. It supports media literacy initiatives amongst children and their parents and acts as a watchdog from the audience perspective on the content provided for children, and on the implications of changes in the way children access media with new platforms and new technology. The CMF provides secretariat services for the All Party Parliamentary Group on Children’s Media and the Arts.

Context The CMF welcomes the opportunity to respond to this inquiry, as we believe that the production of media for children in the UK, on a variety of platforms, is a vital component of a vibrant creative economy. There has been a respectable history of export and co-production in the children’s sector, and the value of British IP (Intellectual Property) in the children’s field, is significant. This includes the work of publishers, interactive producers (or Aps, e-books and websites) and games producers, as well as the more traditional film and television projects. Examples from Teletubbies to Moshi Monsters indicate that the industry “hits above its weight” in export and partnerships. In 2008 PACT (Producers Alliance for Cinema and Television) reported that UK Children’s TV Exports were worth 15% of total TV exports. In most countries that ratio is 12%. But the industry needs support in the face of significant competition from the US giant media corporations (Disney has announced it has bought the Star Wars brand and Lucasfilms Studios for $4.5 billion) and from new threats in emerging markets such as China and India. The use of subsidies, tax incentives and quotas in other territories also puts UK production at a disadvantage, which we will illustrate in some of the examples we provide below. For the CMF there is a cultural element to this argument. Support for UK creative ventures will ensure that British sensibilities are significant in the development, writing and production of the content being provided— even when that content might be an international co-production. We feel it is vital that UK kids get to see themselves represented, hear their own stories and their own voices, in the content they experience. Clearly the ability to retain greater editorial by the UK producer, through greater contribution to the overall budget, means that more elements of the content being produced will retain their British look and feel. There is however also an economic argument. The UK children’s content industry has in the past proved itself a world-beater. But this is no longer the case. ITV’s children’s commissioning is around 10% of the level it stood at 10 years ago, and Ofcom statistics indicate that there has been a 17% decrease in spend on first-run originated children’s content between 2006 and 2011. Our submission by Anne Brogan of Kindle Entertainment will bring into sharp relief the pressures on independent producers as broadcasters have withdrawn from fully- funding children’s projects. The cultural and economic arguments coincide when we consider the power of indigenous media to inspire the younger generation to build a creative career, and to potentially go on to export that creative talent successfully. The CMF is supported by a varied group of individuals who represent that international creative success, who can attest to the importance of UK-produced content in their childhood as an inspiration—eg Nick Park (Wallace and Gromit etc) who cites Blue Peter as a founding influence on his view of the world and his desire to create animation. Or Russell T Davies (Dr Who etc) who quotes his time working in BBC Children’s television as formative in his creative development. We include Anne Wood’s comments on her early career in this submission to support this point.

Response All of the above represents our broad response to the question of the importance of support for the creative industries, and as we contend, in particular the children’s media sector.

More Speciﬁcally We advocate the extension of tax relief to children’s content other than animation (which is only one element in the overall provision), in particular to children’s drama and factual, subject to certain criteria. Eg a cultural test as used in ﬁlm and proposed for animation. Our reasons: cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— The continuing decline in original UK content for kids, in particular in drama and factual, first noted by Ofcom in 2007 when the now infamous 1% figure was first revealed. (Of all the hours of children’s television broadcast, only 1% was newly produced here in the UK. This figure is likely to be even smaller since the decrease in commissioning at ITV). — The changes in the commissioning and financing of children’s content, leading to fewer commissions and the necessity of seeking overseas tax breaks and top up finance. — The subsequent impact on UK independent producers in terms of retaining their IP and sustaining their business. — The resulting loss of economic benefit and the erosion of a niche skills base. — The long term impact on the audience in terms of the disappearance of wide-ranging, culturally relevant, entertaining and educative content in all genres for all age groups—the kind of content which was rightly celebrated in the Olympic ceremonies. In addition consideration should be given to:

Film We welcome the BFI’s stimulus for the animated film sector and would like to see new initiatives in the live-action market as well. UK film production, writing and performances are pre-eminent. The Harry Potter series exemplifies this. But much of the financial benefit was not returned to the UK.

Investment in Indigenous Content We have for some time lobbied for public funding to be found to create an alternative commissioner to the BBC, with the power to commission drama, comedy and factual content, to be delivered via Video on Demand (VOD) services and in partnership with non-public-service broadcasters on a series by series basis. £30 million of Lottery Cultural Funding would have a profound cultural effect on Britain’s kids, signiﬁcantly enhancing the range and quality of content they currently experience. It could also generate investment from the national and international commercial broadcasters as they compete to secure quality new UK content on their networks.

Evidence Below are three statements from distinguished, dedicated and successful producers of children’s content which clearly demonstrate the issues from a number of perspectives, and, we believe, make the case for the extension of tax relief to children’s productions and potentially for further market intervention.

Statement from Anne Brogan, Co-Director Kindle Entertainment (Kindle is an SME with a wide range of successful projects from TV Movie production—Some Dogs Bite for BBC Three, Dustbin Baby for BBC One, Treasure Island for Sky to pre-school programming Big and Small for CBeebies. Kindle won the BAFTA Award for Independent company of the year in 2010 and 11.) Kindle’s experience of making a high-end action adventure show with significant international potential reveals a number of issues that have hit the UK production sector: (1) It is time consuming, complex and challenging to put the financing together on a UK-generated kids drama. (2) Tax breaks are a significant part of any financing plan and so drive where you make the production, often sucking valuable revenue and experience out of the UK economy and creative sector. (3) Other forms of financing (in this case an investment from Ingenious and the Post production house) eat into our share of back end. Taken together, this triple whammy means that it is extremely challenging to stay in business let alone build a business in an area of UK expertise—the creation of kids’ content—that has been a significant part of export sales for many decades. Distribution companies are taking advantage of the weakened position of UK kids Indies and insisting upon very tough deals for their investment, often demanding to take “executive producer fees” equal to the Independent Producer’s production fee, and a back end position—as well as recouping their advance. This stance is becoming more and more common with the big players. A tax break for the Indie would help put some of the power and hence control of the IP back in their hands. In the example below, as well as giving away our back end, we had to defer some of our fees in order to realise the ambition of the show. The kids’ business is a global business but to complete on that global stage we need to be in as advantageous a position as other indies elsewhere in the world. Canada has big tax breaks, as does France, Hungary, Belgium, Malta … and many other parts of Europe. Australia and South Africa also attract UK generated business because of their tax break. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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A tax break for kids drama made in the UK could have huge benefits for the sector—generating business and building up the profile of companies so that they can establish themselves as world leaders in the creation of kids content, putting the UK on the map and creating more jobs and opportunities for people within the UK. The Project Example: The project was funded by the following sources plus a small deferment by Kindle: — Licence Fee. — Distribution Advance. — Tax Credits. — Equity Investment. — Post Production Investment. The recoupment is complex—as these things tend to be—but you can see from below that the production company comes way down the line—even our deferred fee is recouped well after everyone else. 1st Place Distributor Advance (reduced commission) 2nd Place Equity Investor 3rd Place Distributor Advance (commission not taken in 1st place) 4th Place Post Production Investors 5th Place Kindle’s deferred fees We then get to Net Profits. Of which Kindle keep just 52.5% until Equity Investors have recouped an additional £30,000, then this increases to 62.5%

The Breakdown of the Financing Again this is complex but the simplest ﬁgure to quote is the licence fee, which was 78% of the budget. The Indie (Kindle) brought 22% of ﬁnancing to the table, but in doing so gave away a much bigger share of back- end to be recouped higher up the waterfalls. Financed By: £ BBC Licence Fee @ £197,000 per ep 2,561,000.00 78% BBC Worldwide Investment @ £20,000 per ep 260,000.00 8% 90% of South African Tax Credits @ 15% of SA Qualifying Spend 272,560.07 8% Ingenious Investment @ 5% of Cash Flow 157,178.00 5% Post Production company investment 50,000.00 2% Total Income 3,300,738.07

Statement from Anne Wood, Founder, Ragdoll Productions Anne Wood is a Founder Patron of the Children’s Media Foundation. My career probably took a different path to most young people coming into the industry today. I started as a teacher in 1958, and then when my children were born, I started an innovative magazine for parents about books for children. This in turn led me to be invited into television by ITV, as a complete novice, to advise on content. This was at a time (1976) when children’s television was supported by all broadcasters and was given comparable status with other sectors so there was healthy competition. This meant that there was room to allow innovative thinkers, such as myself from outside the medium, to learn its ways and we had the right to fail. This is always an important part of the creative process for anything new to emerge. Short runs of programmes were possible which enabled more experimentation. Budgets were secure, and an infrastructure was in place which facilitated the development process. Now the situation is completely different. Only the BBC commissions children’s programmes of any substance. At best they are only able to offer 25% of the budget. The lack of support of children’s television by other channels means that the infrastructure has been dismantled and it is left to independent producers to survive as well they may with only one real UK customer. I would argue that had it not been for the support I was given in the 70s and 80s by ITV, Teletubbies would not have happened on the BBC in the 90s, and been the huge global success it became. It remains a landmark programme for the amount of revenue it has generated. In its heyday, Teletubbies generated more than £30 million per annum in revenue for the BBC/Ragdoll and it continues to earn and be shown around the world. For me the most important thing about Teletubbies, is it allowed me to pass on my experience to younger creatives, such as Andrew Davenport with whom I went on to create In The Night Garden. This too has become a landmark programme. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Now I am endeavouring to help another generation of potential programme-makers, but unfortunately because of delays caused by the need to raise additional ﬁnance, the infrastructure we had created at Ragdoll has also had to be dismantled.

This matters because creativity in television will only thrive within a proper, professional framework. It is clear that production in the future cannot continue in the way it did in the past. Technology changes and so do production methods, but the origination of innovative content will remain the never-changing, most important factor. We have a proud tradition of this in the UK and there is a serious danger of it simply disappearing because it is no longer nurtured.

Statement from Ad Astra Creative

(Ad Astra is a small SME (small and medium-sized enterprise) working in the Children’s TV/Media IP Production market).

There are fewer and fewer independent production companies specializing in children’s content around as commissioning levels drop and Broadcaster or Distributor corporations find it easier to deal with other suppliers—mainly corporates. Yet a thriving industry of any sort surely needs an energetic balance of start- ups, SMEs and corporates to produce the enterprise and inventiveness required to succeed in a fast moving global industry as well as reflecting culturally the changing UK. We understand even UK corporate suppliers currently struggle to make a profit in the dysfunctional UK Children’s TV market.

Adastra has been in existence for eight years and after development and marketing over two years, achieved a commission from a UK broadcaster. We have now produced two shows with 5 BAFTA nominations and 1 BAFTA award. One of our series has sold to over 104 countries and is one of the top ﬁve shows on the UK broadcaster channel, which is in itself the highest rating channel in its genre in the world. The associated digital games are also some of the most popular on the channel’s website. The broadcaster has now ordered another 52 shows to make a total of 118 episodes. Finally we have a toy licence, albeit at an extremely cautious level. So by all conventions the series is a fantastic success.

Our second series is the top show in several European territories and broadcasts across 50 countries through Europe, the Middle East and Africa. Its recent BAFTA nomination shows the quality we produce and the potential for growth.

Yet we struggle to get commissions and to turn this into a proﬁtable company. This is partly due to international Merchandising and Licensing attitudes to non-animated content (our shows are a mix of animation and live-action). But it’s also at UK Broadcaster Commissioner level (both PSB and commercial) where there is a lack of incentive to commercialise a show. Our international distribution is entirely dependent on large corporate foreign distributors who prioritise their own in-house and co-production shows—ie programmes where they make a bigger investment.

We have worked very hard to keep our IP in the UK and keep production here. We have only been able to do this due to a sovereign investment fund (backed by the EU), which has been available in one of the UK regions. We have almost repaid 52 episodes-worth of investment and we shall persevere in our drive to commercialise in order to repay all the investment and move into shared proﬁt.

The sovereign investment fund is now no longer available and it has been extremely difficult to find alternatives. We will probably have to defer Programme Producer and Company Production fees to pay for this—ie not pay ourselves. The alternative will be to give away IP abroad and get involved in an expensive process of using facilities and talent in another country, as those are the complications which come with co- production. It will be more expensive, more complicated and the quality will suffer and it will be the only option if we have to cut our costs any further. If we had an equal tax relief regime to our foreign competitors we could fill the gap.

We continue to see foreign companies through Broadcast or VoD dumping children’s media on the British public well below cost. If the BBC didn’t exist, we would have a miniscule production sector—possibly only BBC in-house. For a UK company (UK IP, UK production and UK value base) to compete in this market, whether through people like Disney, Nickelodeon, or the new platforms such as Netﬂicks, is almost impossible as they have vast libraries of cheap material from North America.

We need to encourage a UK competitive production and commissioning environment by providing much- needed support. Then we would be able to show the world the brilliance of our Children’s IP media production, which we have excelled at so stunningly in the past. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w100 Culture, Media and Sport Committee: Evidence

Written evidence submitted by the National Museum Directors’ Council 1. About the National Museum Directors’ Council (NMDC) The NMDC represents the leaders of the UK’s national collections and major regional museums. Our members are the national and major regional museums in England, Northern Ireland, Scotland and Wales, the British Library, the National Library of Scotland, and the National Archives. While our members are funded by government, the NMDC is an independent, non-governmental organisation. The NMDC was founded in 1929, in anticipation of a Royal Commission recommendation that the national collections should “coordinate their work and discuss matters of mutual concern”. Today the NMDC provides its membership with a valuable forum for discussion and debate and an opportunity to share information and work collaboratively. This response highlights some key points on the vital role museums play in supporting, inspiring and contributing to the UK’s creative economy. It is intended to compliment submissions made to the Inquiry by individual NMDC member organisations.

2. Summary The UK’s creative industries are world class and make an important contribution to “UK plc”—they have contributed £60 billion, or 7.3% GDP, to the UK economy. The creative industries rely on the UK’s reputation for creativity and innovation, and museums play a key role in this. The Collections Trust estimates that UK museums and trusts contribute around £1.2 billion to the UK economy each year through their exhibitions and cultural activities. UK museums and galleries are catalysts for creativity, driving and presenting the best of British design and innovation. Museums inspire the creative practitioners of the future, acting as centres of learning for the creative industries and providing the infrastructure vital for the development of a workforce with creative skills. They support creative practitioners in a variety of ways and showcase UK creativity and innovation to audiences worldwide. Major UK museums and galleries are internationally recognized and trusted brands and play a key part in making the UK an attractive place to visit, study and invest. Museums contribute directly to the UK creative economy by commissioning and undertaking work with artists, designers, architects, scientists, engineers, writers and ﬁlmmakers. They license the use of images and audiovisual material in their collections for non-commercial and commercial purposes, and in doing so support a huge range of creative industries. Continued Government support and investment in museums is vital to ensure they can sustain their innovative practice and continue to inspire and showcase the best of British creativity.

3. Inspiring the Creative Practitioners of the Future Museums and galleries are a source of inspiration and research for designers and key resources for industry. A workforce with creative skills is vital to the UK economy, and this can only be supported by a cultural infrastructure from which it can draw its inspiration and its values. UK museums’ encyclopedic collections—of art, natural history, design and technology, archaeology, social history and much more—provide an invaluable reference and continuous source of new ideas. Studying museum collections and the celebration of human and natural ingenuity they contain inspires this generation’s innovators and inventors. Designers of all kinds have been inspired by the nation’s collections and will continue to do so in the future. These designers cover a huge diversity of interest—from fashion to scientists, engineers to authors, traditional crafts to film-makers—and can be found visiting the collections. The Victoria and Albert Museum was established with the express purpose of inspiring the makers and consumers of design through exhibiting the best in contemporary art and design and one of the museum’s key strategic aims today is “to promote, develop and contribute to the UK creative economy by leading the field in debate, inspiring designers and makers, commissioning excellent design and stimulating enjoyment and appreciation of art, design and performance”. In 2011–12 42% of all visits to the V&A (1.1 million visits) were made by practitioners, students or teachers in the creative industries. Vivienne Westwood is one of the UK’s most successful fashion designers and has made much of gaining inspiration from spending hours studying the V&A’s collections. Her infamous 1983 “Pirate” collection was based on an illustration she discovered in the National Art Library at the V&A and that relationship has continued ever since. The V&A embarked on a hugely popular worldwide tour of her work from 2004, and brought two of the UK’s most well-known style brands together in front of a global audience. Sian Zeng runs a London based print company that produces interior products, wallpaper and gifts. She used the British Library’s collections to research her dissertation on Little Red Riding Hood and fairy tales, which has influenced the development of her products. She won a place at the 2012 Spring Festival and took part in a training session on how to run a market stall in the Business & IP Centre. Sian was awarded the young talent of the year by Elle Decoration Hungary in 2011 and has exhibited at Stella McCartney’s showroom during Milan Design Week. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The Science Museum has employed an inventor-in-residence in 2012 who has created products to take to market inspired by the Museum’s collections. The Museum also produces a “style guide” for members of the public to use to develop their own ideas based on the Museum’s collections.

4. Museums as Centres of Learning for the Creative Industries Museums are the nation’s great learning resource—through their collections and the expertise of their staff they introduce new subjects, bring them alive and give them meaning. Museums are an objective and independent voice contributing to national and international debates on science, technology and art. They promote awareness of critical questions of place, humanity, science and innovation. Science and engineering are an important part of the UK’s creative industries, and museums like the Natural History Museum, Ironbridge Gorge Trust, the Science Museum Group and Thinktank in Birmingham play a leading role in delivering the Government’s STEM (science, technology, engineering and maths) agenda. Learning through and about the arts enables young people to make, create, learn and express themselves, and this is fundamental to achieving success in school and later life. Experience and conﬁdence in the arts give skills vital to the creative economy. Securing the arts in the national curriculum is crucial to ensuring the UK remains a world leader in cultural learning, and to maintaining a workforce with creative skills. The omission of the arts from the new English Baccalaureate is a serious concern and at odds with any efforts to support and develop the UK creative economy. The Science Museum runs a series of Antenna Live Science events. These focus on the latest contemporary science, with current practitioners and researchers coming to either demonstrate the latest technology or carry out research with the Museum’s audiences. One example, What makes your walk unique?, was run by researchers from the Movement Science Group at the School of Life Science, Oxford Brookes University, and involved analysing the unique movement patterns of over 2,000 museum visitors. The study will help researchers to develop a device to identify different walking characteristics and future could be used to assess people with walking difﬁculties and help provide personalised treatment. In the last year the Tate’s learning team has been consulted by organisations from countries across the world. Through turbinegeneration, the online resources developed by Tate, over 32,000 learners participate in a cultural learning network that spans over 40 countries, exporting UK cultural learning expertise and maintaining the UK’s reputation as a world leader in cultural education.

5. Showcasing UK Creativity and Innovation UK museums promote the creative industries by presenting the best creative and innovative practice to a wide audience across the UK and internationally. They also support independent companies and small businesses by stocking their products in museum shops and associating them with the well-known brand of the museum or gallery. Museums are the “shop window” for the UK’s creative economy—both in the UK and overseas. Museums are engaged in ambitious touring exhibition programmes during which they showcase UK art, design and innovation. The V&A’s 2012 summer exhibition specifically did this with British Design Now, showcasing British design innovation since 1948. Visiting museums and galleries has never been such a popular pastime— the DCMS Taking Part survey found that 51.3% of people visited a museum or gallery 2011–12. National museums are some of the UK’s most visited tourist attractions with the Natural History Museum, British Museum and Tate all receiving over five million visitors per year. This footfall is further extended by national and international touring exhibitions. In addition museum buildings, public spaces, exhibitions and displays showcase the highest quality design. New museum buildings regularly win architecture awards. The National Media Museum hosts the annual Bradford International Film Festival, one of the most anticipated events in the UK film calendar. Over its 17 editions to date the Festival has presented hundred of new and classic films, and includes awards such as the Shine Short Film Award which highlights new works by short film directors. The Museum also hosts the UK’s longest running animation festival, the Bradford Animation Festival, which celebrates the best new animation from the UK and around the world. The Festival includes industry talks and workshops dedicated to exploring the overlaps between the worlds of video games, animation and film. Each year the Shipley Art Gallery, part of Tyne and Wear Archives and Museums, hosts an annual craft selling show, Christmas Present. The show has been running for 20 years and average value of works sold each year is around £10,000. New museum buildings showcase the talents of major UK and international architects, offering opportunities to create iconic and inspiring buildings. The Imperial War Museum’s American Air Museum building at Duxford, designed by Foster and Partners, won the Stirling Prize in 1998, and the Daniel Libeskind-designed Imperial War Museum North was nominated for the Prize in 2004. Eleven other UK museums have been nominated in the Stirling Prize’s 16 year history, and the museum and library sector as a whole accounts for more nominees than any other. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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6. Supporting UK Creative Practitioners Museums directly support creative practitioners in a variety of ways—through exhibiting their work, appointing resident artists and designers, commissioning the creation of new work or the facilitation of workshops with visitors, or by offering opportunities for volunteering. Museums are also active employers of creative professionals—for capital projects, exhibition design, installations, retail products and teaching opportunities. Public museums and galleries provide both a training ground and a showcase for artists, craftsmen, makers and entrepreneurs. Local and regional museums champion and incubate local talent: the Leeds Craft Centre stocks locally-made products; Birmingham Museum and Art Gallery celebrated contemporary lace-making and Manchester City Gallery papercraft in 2012. The National Portrait Gallery, Royal Museums Greenwich and the Natural History Museum all exhibit the work of entrants into high profile annual competitions for portraiture, astronomy and photography, attracting audiences of thousands. Museums provide crucial opportunities for young artists through competition and work with art schools. Licensing forms an important support role performed by museums and galleries. The licensing of images and audiovisual material helps support publishing, design, film-making and the gift industry. In 2007, the IWM generated £800,000 through film licensing alone, illustrating the crucial importance of national collections as material to inspire film and documentary making. The National Gallery’s Metamorphosis: Titian 2012 was a collaborative project between the Gallery and the Royal Ballet. The Gallery invited artists from all disciplines to respond to three paintings by Titian by producing a body of new work for publication, performance on stage at Covent Garden, and for display in an exhibition at the National Gallery alongside Titian’s work. Three contemporary artists—Chris Ofili, Conrad Shawcross and Mark Wallinger—were invited to make new stage sets and costumes for ballets, and were given a room each in the National Gallyer’s main exhibition space to display their new work in a free exhibition that ran throughout the Olympic period. Artists are supported by the Ironbridge Gorge Museum Trust on a number of levels, including the provision of high-quality exhibition and retailing opportunities, with the Museum’s established retail units throughout the Gorge. In 2010, the Museum launched a new range across its retail units called Made in the Gorge, showcasing the work of artists and makers based within the World Heritage Site. The Trust is the landlord for Craven Dunhill, a major manufacturing business producing period style tiles and features, and for a company called Scream, which produces digital interactives for companies including Orange. Turner Prize-winning artist Grayson Perry was inspired by the collections of the British Museum, creating exclusive merchandise for the Museum as well as new work based on the collections which were exhibited in his hugely popular 2012 exhibition at the British Museum The Tomb of the Unknown Craftsman. The chimneypiece makers Chesneys worked with the Sir John Soane’s Museum to create a range of Soane collection-inspired chimney pieces.

7. Contributing to the Creative Economy Museums contribute directly to the UK creative economy through the work of the creative professionals on their own staff. Many larger museums offer consultancy services in a range of specialist areas such as exhibition design, conservation and collections care. Many also publish books through their own in-house publishing or in partnership with other publishers. Museums license the use of images and audiovisual material in their collections for non-commercial and commercial purposes, and in doing so support a huge range of creative industries. The Natural History Museum offers a world-class consultancy service rooted in the expertise of Museum staff. Services provided by the Museum include advice on exhibition design, caring for collections, project feasibility studies, facilities assessments and visitor programming. The Museum also delivers a range of specialist scientific consultancy, research and education services including analytical and imaging facilities, environmental assessments, and advice on subjects ranging from biomedicine to mining and petroleum. NMDC broadly supports the findings of the Hargreaves Review of Intellectual Property and Growth. In particular the proposed solution to the problem of “orphan works” (a work for which it is not possible to locate the rights holders after a diligent search) in the Enterprise and Regulatory Reform Bill creates a way for creators to be recognised and recompensed whilst enabling commercial and non-commercial use of orphan works in public museum collections. This would provide the opportunity for up to 50 million orphan works to be made publicly available. The British Library provides dedicated services for businesses, entrepreneurs and SMEs (small and medium-sized enterprises) through its Business & IP Centre. This includes 6,900 users from the creative industries as well as high-tech companies and inventors. The Centre provides free access to over £5 million worth of business and intellectual property information and runs a programme of workshops, one-to-one advice sessions and networking events. Significantly, it also helps users to cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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understand the principles of intellectual property (copyright, trademarks, patents, registered designs) and their rights for their own creative work. Since opening in 2006, the Business & IP Centre has welcomed over 300,000 entrepreneurs and SMEs including repeat visitors, and delivered advice and skills training to over 30,000 people. As a result it has helped to create 2,775 businesses, of which 40% are owned by women, 29% by ethnic minority groups and 10% by people with a disability. An additional 3,345 jobs have been created in new and existing businesses, and overall, these businesses have increased their turnover by £153 million. November 2012

Written evidence submitted by Demos

1. I am an external (ie part time) research associate of Demos, and I am replying in this capacity. In December 2011 I joined the Creative Industries Council’s Access to Finance Working Group and authored that group’s report back to the Council (delivered June 2012, has not yet been made public).

2. This submission addresses point two in the invitation: Barriers to growth in the creative industries—such as difﬁculties in accessing private ﬁnance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector;

And provides an overview of the Risky Business research project that I lead with Kitty Ussher for Demos and published in October 2011.136

3. The aim of the project was to explore the perceptions of “riskiness” and “difference” that surround the creative industries sector, to see what the data says (are they that different to other sectors of the economy? or riskier? if so how?) and then make recommendations based on what we found.

4. Overview — The data suggests the sector is not that different, or significantly riskier in terms of aggregate business outcomes, than other sectors of the economy. Rather, like other sectors of economy, there is a range of business risk in the sector, depending on the business model of individual enterprises. — Analysis suggests that the following are key drivers of difficulty in access to finance for the creative industries: — Poor coverage in official statistics such as the ONS (Office for National Statistics) and Blue Book series, which leads to this sector falling into a blind spot in both analysis and business support policy formulation, particularly in the Business Department; — A lack of understanding on of the sector by financiers (itself driven by a lack of data); and — A lack of understanding among creative businesses of different types of financing, particularly of the difference between credit and investment and the relevance of the risk profile of a businesses in its suitability for one or the other.

5. Chapter1 (Deﬁning and Mapping the Creative Industries)

6. Sets out our definitions of “business” and “creative” before exploring how the sector is defined by the government and in official economic data. We compare this with how parts of the sector would define themselves, pointing out a clear anomaly of the absence of the economic contribution that manufacturing, services and retail sales make to the size of the creative industries in the government’s approach.

7. We then present an overview of the structure of the sector by business size and contribution to the economy. We show that while the sector is dominated by sole traders and micro businesses (those with one to ten employees), this is no different from the rest of the economy and in this sense, the sector is not unusual or different. (Figures 4 and 5). 136 A full version of which is available for download at www.demos.co.uk/publications/riskybusiness cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Figure 4 ENTERPRISES IN THE UK PRIVATE SECTOR AND CREATIVE INDUSTRIES, BY NUMBER OF EMPLOYEES, 2010

Figure 5 ENTERPRISES BY NUMBER OF EMPLOYEES BY SECTOR IN THE UK 2010

8. The chapter closes with a brief discussion of the resource the government puts behind policy making for the creative industries in comparison to its size and arrangement. 9. We highlight that BIS (Department for Business, Innovation and Skills), the government department that originates almost all the policy initiatives that might support small and medium enterprises (SMEs) in the sector, has little or no civil servant resource focused on the sector. We recommend that the Government reviews its deﬁnition of the creative industries, and boosts its capacity to advise relevant ministers appropriately.

10. Chapter2 (The Creative Industries and the Risk Myth) 11. Drawing on new qualitative research to explore the attitudes of banks and equity investors, we discuss how creditors seek predictability of revenue, while investors seek opportunities for high growth. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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12. Therefore we show that different creative businesses are more suited to different types of financial investment and support and that there are likely to be straightforward—and fixable—explanations for why any individual firm might find it hard to obtain finance.

13. The chapter presents new data on indicators of business risk, including survival trends of new business start-ups over the ﬁrst ﬁve years (Figures 8 and 9) and business failure rates as a percentage of all businesses operating (Figure 16).

Figure 8

AVERAGE SURVIVAL RATE OVER FIVE YEARS OF CREATIVE INDUSTRY AND OTHER BUSINESSES IN THE UK, 2003–08

Figure 9

AVERAGE SURVIVAL RATE OVER FIVE YEARS BY INDUSTRY IN THE UK cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Figure 16 COMPANY DEATHS AS A PERCENTAGE OF ALL ACTIVE COMPANIES, 2003–09 IN THE UK

14. We find that, contrary to expectation, the creative industries sector does not show notably higher failure rates by either indicator. We suggest that the reason for this might be the greater resilience of small creative companies; unlike other start-ups which have higher fixed costs, creative industries businesses can minimise their outgoings when times are tough. Indeed it can be argued that these businesses are outperforming other sectors of the economy in ability to cope with overall business risk, if it is the case that they are launching more products, of unpredictable potential, into the marketplace than most other businesses. 15. In contrast, another sector perceived as “high risk”—hotels and restaurants—shows notably higher failure rates than the average. This suggests that, in business terms, rumours of the riskiness of the creative industries have been exaggerated, a point corroborated by commercial credit ratings. 16. In the light of these findings we then provide a brief assessment of the policy implications and recommend that the Government routinely publishes economic data on the creative sector in a satellite account as part of the ONS Blue Book cycle. We also recommend that the Government and the sector work together to champion the business success of the sector and to facilitate the bringing together of different types of funders with businesses seeking support and to improve understanding on both sides.

17. Chapter3 (How to Succeed) 18. We draw on detailed interviews with some of the most successful companies in fashion, television, video games and music to understand the story of their success. We find there are the following “ingredients of success” in common among the most successful businesses: — a clear intention to make a profit; — a strong performance in businesses planning; — a clear understanding of the risks that face their businesses, how to assess, manage and mitigate against them; — in-depth experience in the business of the sector; — financial and numerical experts working in mutually respectful partnership with creatives; — an understanding of the importance of good relationships to spot and manage creative talent, and to do deals; — an ability to innovated and adapt to changing business environments; and — an ownership stake in the intellectual property (IP) the business is creating. 19. We examine the suitability of the Enterprise Finance Guarantee Scheme and the Enterprise Investment Scheme, recommending that the Government, sector trade bodies, and those who administer the schemes should work together to enable and improve their utilisation by the sector. Taking into account the success of the codes of practice and window of creative competition in stimulating growth in television production (Figure 21), we recommend that the Government should consider how best to increase competition and intellectual cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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property ownership among companies elsewhere in the creative industries that contract with public sector broadcasters and other public bodies.

Figure 21 CUMULATIVE GROWTH OF COMPANIES BY SECTOR IN THE UK, 2002–10

20. We discuss whether creative businesses are uniquely different from other businesses in different sectors, and show that while one group of businesses in this sector is engaged in bringing a constant stream of new and unpredictable creative products to market (which we term SNUCP businesses), there are also many others that have predictable revenues and trajectories. We provide an overview of these different business models, sector by sector, and discuss in each case to what type of ﬁnancing options they are best suited. 21. We highlight that there may be a funding gap for this stream of new and unpredictable creative product businesses, especially when they are small or new, as their revenues are too unpredictable for creditors while their growth trajectory is not sufﬁciently exponential to attract investors. We suggest the Government should review its plans for a patent box and extend it (perhaps to a broader copyright box) to cover these highly innovative businesses, as well as offering a possible solution based on the Prince’s Trust Enterprise Scheme.

22. Chapter4 (The Map) 23. The thorny issue of the Government’s Standard Industrial Classification codes system, the mechanism for collecting and presenting official economic data, on which all other macroeconomic analysis is based. 24. We show how little the current Standard Industrial Classification (SIC) code structure has changed since it was first introduced in the 1940s (in response to the Great Depression) and how this system operates as a map that frames our understanding of the economy. Unfortunately is a nineteenth century map, failing our 21st century economy. 25. Even in the most recent update, SIC 2007, there are 281 detailed manufacturing codes and 114 retail codes, but only 36 codes covering information and communications and 40 covering financial services. 26. We show how the invisibility of the creative industries in the top line sector distinctions creates the perception that the sector is marginal. Moreover, this top line invisibility, combined with a lack of clarity and detail offered by four and five-digit codes, contributes to the paucity of data driven analysis of the sector. 27. Finally we highlight problems with the Government’s own SIC based definition of the creative industries, which although ground breaking at its introduction by DCMS in 1998 (the year that Google was founded) has barely changed since then. For example being unable to separate music from other performing arts like theatre and dance, and under-reporting the economic contribution of companies as large and diverse as ASOS, Festival Republic, Lulu Guinness, Netaporter, Spotify and Topshop. 28. We recommend that in addition to publishing creative industries’ satellite accounts in the Blue Book, the Government should automatically group the creative industries in all its data sets, public and confidential, to enable its own and external researchers to better understand the sector. 29. In line with the discussion in chapter 1, we recommend that the Government re-examines its definition of the sector, and makes it easier for ONS and external researchers to aggregate data on the sector to improve cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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the knowledge base, as well as lobbying in the EU and UN for international reform that supports the reality of the UK economy.

30. Overview of the Paper’s Recommendations and Conclusion 1. Renew and improve the Government deﬁnition of the sector, and the sector’s visibility in ofﬁcial economic data. 2. Introduce and expand civil service resource and expertise in the sector in the departments that matter, especially the Treasury and BIS, so that policies and initiatives designed to support (small) businesses such as UKTI (UK Trade and Investment), EFG (Enterprise Finance Guarantee), EIS (Enterprise Investment Scheme), R&D (Research and Development) tax credit, and currently under review patent box, are designed to work for this sector as well as others from the outset. 3. Prioritise enabling of IP ownership whenever possible to stimulate sustainable growth. 4. Champion and celebrate business success as much as creative success, in particular for the sector to re- consider how it presents itself. Nurture business skills, and create and build links between the sector and lenders and investors. November 2012

Written evidence submitted by the Designer Manufacturer Innovation Support Centre (DISC) and Centre for Fashion Enterprise (CFE)

Background 1. We would like to express views on behalf of CFE and DISC—two SME (small and medium-sized enterprise) business growth projects based at the London College of Fashion in Hackney, and both currently funded via ERDF (European Regional Development Fund). Both projects are respected within the fashion business community and particularly amongst the high-end fashion SMEs they support. They express the views in this paper from an informed point of view having a unique insight into sector, having supported over 300 SMEs in the past 10 years. 2. The Centre for Fashion Enterprise (CFE) is London’s pioneering strategic business development initiative that incubates, supports and develops leading emerging designer labels in the luxury and high end fashion sectors. It has an unrivalled place in the fashion sector. The CFE’s team of industry specialists deliver bespoke support to fashion designers in London, who they consider to be the “engine” of global fashion retail, fashion and lifestyle industries. Since 2003 the CFE has been London’s strategic business development platform for the high end fashion designer sectors and has worked with 275 designers. These designers are recognised for their global reach, their sustainable businesses and press value, consistently pushing the boundaries and influencing the international fashion agenda. The CFE offers a unique 360° business growth support model which includes studio accommodation and resources, expert mentoring teams, legal and financial advice, marketing and international trading assistance. This includes advice on strategic business planning, financial projections, brand development, range planning, production, legal issues, costing, sales and finance. 3. The Designer—Manufacturer Innovation Support Centre (DISC) is only one year old, although three years in the making. The CFE was commissioned by DCMS to carry out a feasibility study on high end fashion manufacturing in 2009 which led to the recommendations for DISC to be established. Since DISC’s recent launch, it has already established a network of manufacturers of high end fashion, and its aim is to reach out to the full 150 specialist manufacturers in London, thereby building a good manufacturing supply base that supplies high end fashion designers in London, populated by people with serious intent that we can endorse. The vision is for London to produce premium high value designer fashion garments that will compete on a global retail platform on quality and reliability. 4. Therefore CFE and DISC are coming to these issues for the creative economy with an informed point of view, evidence and case studies, as well as anecdotal data from our 10 years working directly with the industry. 5. DISC and CFE wish to highlight to the DCMS that high end fashion manufacturing is a critical part of the creative economy, in order to support the high growth of London’s designer businesses. There are around 17,000 jobs in designer fashion manufacturing in the UK (around 8,500 in London), and fashion manufacturing on clothing and footwear contributed £1.1 billion to UK GDP in 2010 on a turnover of £3.2 billion. As much as 75% of UK designers’ products is being manufactured overseas, potentially valued at £241.5 million; and a significant target for the sector to slice into. There is support needed to address barriers to growth and other issues, our views on which we will express in this paper. 6. DISC and CFE (being part of the London College of Fashion) are in an ideal situation to deliver solutions due to the reputation of the university as reliable, informed and trusted. LCF (London College of Fashion) has a vested interest to retain the sector in order to protect its position. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector 7. The high-end fashion sector sees anywhere between an estimated 20 and 50 new UK designer/wholesale labels looking to break into the market each year. The sector is high profile and if the label has the right champions/connectors behind it, can achieve rapid international sales and there are many successful case studies to support this. Some designers supported by the CFE have achieved £2 million p.a. turnover within four years of their label’s launch. This high growth is only achievable by approx 10% of the designer labels. The barriers to growth for the other 90% include: (a) Lack of close-by production facilities and production capacity. (b) Lack of access to finance. (c) Lack of access to business experts. (d) Over-reliance on traditional wholesale business model. 8. Conversely, there are very few new suppliers into the manufacturing side of the supply chain. There are three significant barriers to entry for these manufacturers. These barriers are also impeding the sustainability and growth of existing suppliers (manufacturers): (a) Shortage of training and skilled workforce. (b) Lack of resources and know-how to adopt new technologies. (c) Entrepreneurial skills. 9. To support the development and growth of the creative economy, our view is that skilled machinists and pattern cutters are needed for the industry (to be discussed later on in this paper) as well as those trained on digital technologies. Open access to digital technologies is required to allow designers and manufacturers to see the benefits of digital equipment and be able to “have a go”. UK manufacturers need good, well-functioning equipment that is upgraded on a regular basis if they are to compete with French and Italian manufacturers who are some of the market leaders and renowned for high quality. Furthermore, UK manufacturers need to be encouraged to recognise the long-term benefits of investment in research and development activities and the positive impact that such investment can have on maintaining and improving workforce skills. 50% of manufacturers recently surveyed by LCF (August 2012) said they felt that CAD and IT skills would benefit their staff. 10. The majority of London based high-end manufacturing SMEs rely on traditional techniques which are inefficient and uncompetitive, especially compared to continental European manufacturers who often integrate traditional hand craft techniques with cutting edge technology. The aspiration has to be to bring the UK’s high- end fashion manufacturing sector up to world class standards. 11. Availability of facilities where shared digital equipment could be showcased and available for open access, plus funding for investment into new digital technologies could help encourage digital growth in this industry. Tax breaks and training facilities to allow companies to see the worth of these technologies would also encourage investment. Tax breaks exist for investors, but a more equitable scheme where the tax break is shared across investor and investee could reap greater ROI for the government.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget 14. As previously mentioned, tax breaks for investors, incentivise these investors to be more receptive to high risk sectors and businesses such as those in the creative industries. However, what is needed is for these cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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tax breaks to be more equitably shared across investor and investee. This will positively increase SMEs attitude to considering being invested in, and will increase the monies into their business.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this 15. The development of projects such as the CFE and DISC within university environments are critical. They have built up enviable trusted relationships within their sectors and have vested interests in ensuring they are given the right tools and knowhow to grow and flourish. These projects have access to experts who are able to identify skills shortages and develop fit for purpose skills acquisition mechanisms. 16. At DISC they have identified that skilled machinists and pattern cutters are needed for the industry, to sustain the growth of designers as discussed earlier in this document. LCF have submitted a BIS AMSCI (Advanced Manufacturing Supply Chain Initiative) bid proposing to set up a Training Factory/School capable of developing 15 (later 30) trainees p.a. to become competent sewing machinists or cutters ready for the industry to employ. This will safeguard existing manufacturing businesses and provide a sustainable succession plan for up to 30 SMEs. The Training Factory would be incubated by LCF through its DISC department at the college’s east London campus, at the heart of where the UK’s high-end fashion supply chain is located. It will draw on the successful Savile Row Tailoring and Burberry leather crafted products model. 17. The Training Factory/School could be rolled out across London after this pilot. This will lead to the sector adopting apprenticeship schemes via other funding routes, and are part of the project’s legacy which includes the formation of a group training association (GTA), which would alongside LCF be responsible for the future running of the Training Factory. 18. Digitisation: SMEs need to know how and where to access digital skills. Accessing digital bureaus is cost prohibitive for most SMEs. Adoption is often dependant on size of the businesses, but 2D technology is perceived to give competitive advantage. As discussed earlier in this paper, open access to digital technologies is required to allow designers and manufacturers to see the benefits of digital equipment and to build skills to allow designers to be able to innovate and prototype. 19. Management/entrepreneurial skills: with high end manufacturers, normally the company is managed by the owners. Typically, it is a multi style, multi customer, low volume business. If we accept that regardless of order size the time taken to administrate an order will be the same, then the total administration time will be proportionately higher in comparison to other high volume manufacturers. Everything is done manually, using spreadsheets and written format, the average administration time required for our sample manufacturers is 60 hours per week. It is important to note that activities will not be equally spread over the year, there will be certain times in the year when the manufacturers are overwhelmed, to the point were it will not be possible for all activities to be completed on time. This could lead to shortcuts and certain non critical activities being overlooked on a regular basis. An example of such activities would be planning and progress reporting. 20. DISC is currently assisting a small number of manufacturers with planning tools to assist them with managing their businesses but further work is needed beyond the life of the DISC project in order to roll out these management tools to manufacturers in London.

The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication 21. There is already evidence that the clustering approach works in fashion, as evidenced by the distribution of businesses across London and models such as CFE. As fashion businesses in the high end are typically small, more work could be done in facilitating clustering of both designers and manufacturers. 22. Fabric minimums are an issue to designers. The minimums can prevent designers being more innovative and gaining best costs. A clustering approach for designers could allow greater negotiations with suppliers (manufacturers and fabrics/trims) where minimums are currently too great for many small designer businesses. 23. For manufacturers, the seasonality and constant changes in workload means that capacity can be an issue at pivotal times. This means potentially turning work away, or using freelance staff (where quality might be an “unknown quantity”) who move to other factories at times when capacity is underused. If manufacturers could work more closely as a cluster, workload could potentially be more evenly spread allowing factories to run all year (potentially), retain their good quality workforce and plan for capacity issues more effectively. 24. Clustering of manufacturers will help in terms of skills and employees—if manufacturers cluster they could form a GTA which could eventually manage a machinists training school. Clustering of businesses may drive up standards and working practices as comparisons with neighbouring businesses becomes more transparent. Clustering models could be produced which could be replicated across the UK, best practice and case studies could be used to inform other clustered fashion industries outside of London or the High End. 25. DISC could act as an anchor for the industry and help with the set up, marketing and management of this clustered model. If there was an appetite from designers/manufacturers, DISC could provide assistance in the logistics of setting up a cluster, help with marketing the scheme to relevant interested parties, assistance cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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with steering the clusters and the legal implications of any contractual agreements. DISC input would need to be substantial in terms of assistance and research to assist with this. Businesses with an appetite would also need to be identiﬁed before work could start on clustering.

26. New workshop unit at Somerset House under Estethica is encouraging upcycling of fabrics and will be working with Topshop. Up cycling assists sustainability, reduce waste and costs.

27. Jewellery and garment designer collaborations help foster innovation as the overlap and differences of techniques, equipment and design stimulate advanced thinking and design which draws from both industries. November 2012

Written evidence submitted by the Associate Parliamentary Design and Innovation Group

From APDIG (Associate Parliamentary Design and Innovation Group) Ofﬁcers: Barry Sheerman MP, Gavin Williamson MP, Baroness Janet Whitaker, Lord Michael Bichard, Lord Richard Rogers.

The APDIG exists to promote dialogue between parliamentarians, policymakers, and the design and innovation communities, in the pursuit of improved policy for the sector, and to suggest ways the sector might be able to help government in its own aims. We have a broad industry network from which we have drawn the opinions and evidence set out below. This submission is a summary of the main issues we see in relation to what government can do to support the design industry. It covers: — Background/overview of the industry. — Growth (and barriers to growth) in design. — Education and skills. — Government support: — Working with SMEs (small and medium-sized enterprises)/micros. — Design rights/IP (Intellectual Property) for the design industry. — Government industry interaction.

At the end we have also included a list of people we believe may be useful witnesses.

For more information about the group, its activities and industry members, please see our website.137

Background/Overview of the Industry — The UK design sector is an important wealth creator and source of innovation. It is the engine that drives the other creative industries, and other sectors beyond (manufacturing, services): either with the provision of speciﬁc design services or, more importantly for growth, particular parts of the design sector are an important source of innovation for other industries. — When used strategically, design can support business across the economy as an effective tool to open new markets, develop products and understand user and investor needs. — The Olympics opening ceremony demonstrated its pervasiveness into multiple arenas very well.138 — We also have a global reputation for excellence in design.139 — The disciplines we are concerned with are those which tend to provide services to other industries/ sectors: product, industrial, graphic, communications and information design, interaction, service and social, digital, interiors and exhibitions, and the more technologically engaged end of the craft sector. Many agencies combine several of the above—design acts as a hub for a range of skills. Multi- disciplinary working is key to innovation. — The sector is mainly composed of small or micro businesses. Recent research by the Big Innovation Centre found that 74% of designers are self-employed, and 64% of specialised design workers work in micro businesses.140 It is by nature quite fragmented and varied—and it seems to be difﬁcult for government to understand or assess this particular part of the economy with the same metrics it applies to analyse other industries. — However getting an accurate picture is important. Design is at the source of some of the key industrial successes around us, from mobile phones, games, cars. Government ought to be actively and overtly supporting this key strategic industry. 137 www.policyconnect.org.uk/apdig 138 www.guardian.co.uk/culture-professionals-network/culture-professionals-blog/2012/aug/06/london-2012-art-design-support- policy 139 www.nytimes.com/2012/09/27/garden/in-praise-of-british-design.html?pagewanted=all&_r=0 140 http://biginnovationcentre.com/Assets/Docs/Powerpoints/UK%20design%20as%20a%20global%20industry_Slide%20pack.pdf cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Growth (and Barriers to Growth) in Design — It is, for various reasons, not in the nature or business model of design businesses to be large. They tend to be closely tied to the personality and interests/drive of their founder/owner, and many in the sector would argue that beyond a certain size the necessary dynamics no longer work. Indeed some of the most profitable agencies remain small their entire lives (ie 11–20 employees). Having said this, the UK boasts more large design agencies than anywhere else in Europe. — However there is a challenge in supporting start-ups to grow to the next level. At the moment, to make it big, some British designers have to go abroad to find the structures to support them. There is also a need to bolster entrepreneurialism and business skills across the creative sectors including design—design businesses, in common with other creative industry business, can face problems in scaling up and growth. The easiest place to administer this training would be whilst students are still in education. But the business support required is different at different stages of business development, with start ups typically facing problems of access to finance and larger businesses requiring management and HR support for example. CPD (Continuing professional development) in the sector is fragmented and inconsistent. — There is also a question about where design for innovation sits—normally a phase in the process of new product development/new service development. Few design companies own the whole development arc—they are consulted as experts at a particular point in production/delivery. However often their greatest contribution comes before that stage, in ideation. Arguably what we need for growth is more design-led businesses. At the moment what we have is a strong and very creative design sector trying to trigger innovation in, for example, a not-uniformly-innovative manufacturing sector. If design were more embedded, at a strategic level, in other businesses, that could seriously drive growth. — For example, typical results from the Design Council’s design-led coaching programme for business include better user and customer awareness, new products and increased turnover. — For the sector at present, growth will come through increasing exports, more design agencies, and greater take-up of design input by other sectors. — On exports—whilst this may be a way of design companies earning fees—one could also see this as our brightest innovators giving away their ideas to competitor nations. UK plc needs to get much better at working with this source of innovation. — The small innovative design companies, that use design to bring a number of bodies of expertise together, invent new products and services etc, sometimes need to be strategically supported through to the proof-of-concept stage. As it is sometimes difficult to make the case for private investment, this is somewhere the TSB (Technology Strategy Board) could help. Moreover, there is a need for support for non-technological innovation. We would encourage the TSB to take more account of the design sector in their programme of work.

Education and Skills — As a small island nation we need to be innovators. We are concerned that at the moment schools are not focussing enough on developing imagination, creativity, innovation, collaboration (21st Century skills argument). This is as much about method of teaching as content: there is no reason why this cannot be done within the current subject range. But D&T (Design and Technology) and Art & Design are critical spaces within the timetable which allow creative work, and should be kept on the curriculum. As also are music, drama, dance, etc—but the ﬁrst two are particularly relevant to the design industry. — Whilst we accept we need to see an improvement in literacy/numeracy, this will only come about through greater student engagement in their own learning. Design can be a better process for learning—see what studio schools are practicing. Design offers a powerful alternative for student to learn with a particular focus on problem solving. Moreover, in today’s world, the rise of new technologies and digital context require different aptitudes and learning approaches, “3D learning”. — Lack of coordination between government departments is an issue here—particularly differences between DfE (Department for Education) and BIS. BIS can’t drive growth without the support of education. — To a certain extent design suffers in a similar way to manufacturing—the more academically gifted pupils tend to be steered away from creative and technical subjects like D&T and Art, seen as less rigorous than core subjects. The Ebacc has reinforced this message. Better careers guidance, and more involvement from local employers in schools, would help counter this. — We are pleased to see government support for a National Skills Academy for Design, and for the Sorrell Foundation Saturday Art Classes. — Our design research sector (in Higher Education Institutions) is a national asset, which isn’t always reﬂected due to the parameters of the Research Excellence Framework (REF). cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— Impact of visa restrictions: the UK economy has beneﬁtted from training foreign students and allowing them to “set up shop” here. (Hussain Chalayan, Zaha Hadid.) Their activity has been beneﬁcial to the UK economy, we shouldn’t undermine this. — See comments from Janet Whitaker and Lord Bichard in a recent Lords debate on excellence in education.141 — See report from the Design Commission on supporting the design education system.142

Government Support Working with SMEs/Micros — As much of the sector we are discussing is small (majority fewer than ten employees) special attention needs to be paid to the nature and quality of the interaction between government policy and the target, as with all SMEs. — Policies—especially those aimed at business support and stimulating growth—will fail when they meet the real world if they do not take account of typical business profiles, cultures, behaviours, etc. (This is behavioural insight as applied to businesses rather than individuals.) Most SMEs, and particularly those at the smaller end, are inherently difficult to reach. Improving the “touchpoints”— the ways in which businesses interact with policies in a material sense—is crucial, but unfortunately not a skillset governments central or local frequently possess. — This is particularly pertinent to the reform of the procurement process, but we have been impressed with the recent progress made on this front. Business support policies targeted at SMEs (particularly around start-up loans, IP protection systems, taking on apprentices, R&D tax breaks, and help for export) could benefit from similar improvements.

Design Rights/IP for the Design Industry — The “proposals to change copyright law without recourse to primary legislation” currently included in the ERR Bill are an important step towards enshrining in policy the value of design. However, practically, the change will only make a difference right now to those designer/manufacturers of designs over 25 years old. — So we welcome this but there is much more that needs to be done to iron out the “patchwork” of IP for design identiﬁed by Hargreaves. It seems that the rigours of the European framework, combined with likely cost of legislation changes, mean that calls for far greater simplicity from the sector will not really be answered, which is unfortunate. — The IPO have recently carried out a consultation which bears out the argument above about understanding SMEs. The process has demonstrated little understanding of the realities of the industry they are designing policies to serve. Due to restrictions in the policymaking process, suggestions for improvement are of the order of minor incremental changes, rather than wholesale revision based on the needs of the industry.

Government-Industry Interaction — Unlike some other similar industries, (engineering or architecture for example) the design sector is not centrally organised, institutionally, which necessitates a different relationship to government. There is no one body regulating or defining the profession, or controlling its barriers. Anyone can call themselves a designer. There are clear historical reasons for this—but it is important to understand the landscape and dynamics of the sector, and its conduits to government. The absence of single professional accreditation, and the level of diversity in the sector, means it can be challenging to address issues afflicting the industry (ie barriers to growth) in a top-down way. This has an effect on how policies for the sector might be communicated/implemented. — There remains considerable untapped potential for design to be integrated into civil service training and development of more efficient, cost-effective and user-centred services and alternative solutions to policy challenges. — Whilst it has made great progress following the Livingstone Review on skills for the games industry, the Creative Industries Council ought to have more clout, and greater representation from the design industry. At present the Design Council is the only design voice at the table. In light of the sector’s significant economic contribution (design-intensive sectors account for approximately 7% of the economy’s GVA and 11% of its employment)143 we believe there is room for additional design representation at the table. 141 www.publications.parliament.uk/pa/ld201213/ldhansrd/text/121018–0001.htm#12101827000235 142 www.policyconnect.org.uk/apdig/design-education-inquiry 143 www.ipo.gov.uk/ipresearch-ukdesign-201207.pdf cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— Further, we would support Heseltine’s recommendations around government/industry interaction (Heseltine recommendation #33: An Industry Council should be established for each formal partnership between government and a sector), and suggest that more sectorally speciﬁc councils would be more productive. Creative Industries is too broad a brush. The Automotive Council, for example, seems to work very well, and there is no question of subsuming that into a general “manufacturing council”. — Encouragement from government to the industry to coalesce for the purposes of mutual interaction might be the stimulation the sector needs to organise itself better.

Suggested Witnesses to the Inquiry John Mathers Design Council Deborah Dawton Design Business Association Deyan Sudjic/Alice Black Design Museum Catherine Large Creative and Cultural Skills Richard Green D&T Association Sophie Leach NSEAD Su Timney British Institute of Interior Design Rosy Greenlees Crafts Council Linda Drew Council for Higher Education in Art and Design November 2012

Written evidence submitted by Penkat Studio 1. This submission contains views for the following issues: 1.1 How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games. 1.2 Barriers to growth in the creative industries—such as difficulties in accessing private finance— and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector. 1.3 The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament). 1.4 Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this. 1.5 The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication. 1.6 The work of the Creative Industries Council and other public bodies responsible for supporting the sector. 2. Penkat Studio is an independent production studio located in Milton Keynes, Buckinghamshire. Penkat Studio specialises in a range of television and film production, including services to large scale broadcasters. Penkat Studio believes the Expansion and progression of SME’s would be negatively impacted if the creative producers rights are not maintained. 3. The issues listed above [1.1–1.6] have come to the interest of Penkat Studio as each issue has had a significant impact on the operational basis of the business. The legacy of creative talent should be cherished and encouraged to grow from national and worldwide events, such as the Olympics Opening and Closing cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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ceremonies, although this is hampered via a combination of the different issues that have been cited in 1.3, 1.5 & 1.6. The following viewpoints are also outlined in the “ICOMP Submission Independent Review of Intellectual Property and Growth”.144 3.1 Penkat Studio feels that the proposals outlined in the independent Hargreaves Review [1.3] needs to support independent content makers to ensure that original content and their creators are protected from the exploitation of content hosts. 3.2 There needs to be system to balance the rights of the content creator and User Generated Content Sites. These same sites need to be held accountable for false copyright infringement claims. Penkat Studio has been affected by copyright claims against videos and music work that has been legally bought and paid for through royalty free agencies, many of these copyright claims are handled through automated systems on User Generated Content Sites, these organisations should be encouraged to investigate each claim thoroughly before siding with a false complainant. Penkat Studio has encountered this with UMG and YouTube despite buying royalty free music from a third party organisation. 3.3 London is one of the most dense media production hubs in the United Kingdom. Changes within ‘Film London’ introduced new barriers that prevent production companies from easily operating within the city. Previously, production companies used to apply for permits from “Film London”, these were then submitted to the appropriate boroughs for authorisation. This process no longer takes place; if a production company wishes to film within several boroughs, the production company must apply to each borough individually for a filming permit & authorisation to use equipment, such as tripods. This change introduces a barrier for those that work outside London, Penkat Studio feels that if the services of Film London returned to their previous workflow it would allow new content creators easier access to the capital. 3.4 The role of education [1.4] must focus on the real world application of media production to ensure that graduates have the best skills pedigree before they enter the workplace. It has come to the attention that many students lack basic skills and knowledge after leaving higher education to participate within a real world working environment. Career guidance and prospects should be part of the higher educational system to ensure that future media creators have a clear picture of the media production sector. 4. Penkat Studio believes that the future for the creative economy can be kick started by giving more practical education for those that are going through further and higher education. Elements such as allowing more freedom in regards to shooting within London would also help nurture creative talent. Creativity needs to be protected from those that actively abuse the original content creators. Copyright claims and the processes of how claims also need to be reviewed to ensure that creators get fair treatment from User Generated Content Sites. November 2012

Written evidence submitted by Consumer Focus 1. Consumer Focus is the statutory watchdog for consumers in England, Wales and Scotland, and for postal consumers in Northern Ireland. We would like to see competitive markets in copyright protected content where consumer demand is met in a timely manner through innovative goods and services. We would like to see a copyright system which supports this by striking the appropriate balance between the interests of creators, investors, copyright owners, intermediaries and consumers. 2. Consumer Focus welcomes the opportunity to provide written evidence to the Culture, Media and Sport Committee call for evidence on support for the creative economy. Though we note that this is the fourth inquiry into the same subject matter in two years. 3. Consumer Focus has submitted written evidence to the Business, Innovation and Skills Committee inquiry into the Hargreaves Review of Intellectual Property and the Government’s response to the Review. Consumer Focus also provided written and oral evidence to the All Party Parliamentary Group (APPG) for Intellectual Property (IP) “inquiry” into the role of Government in promoting and protecting IP. There is a significant overlap between these two inquiries, and the current Culture, Media and Sport Committee call for evidence on support for the creative economy. Similarly, there is a significant overlap with the Culture, Media and Sport Committee inquiry into the Protection of Intellectual Property, which was launched in November 2010 and suspended in April 2011. 4. Entrepreneurs, SMEs (small and medium-sized enterprises) and creators organisations are largely absent from the list of organisations which submitted evidence to the Business, Innovation and Skills Committee inquiry and the APPG for IP “inquiry”. Responding to inquiries requires significant resources. Likewise, responding to the Intellectual Property Office (IPO) consultations which followed the Hargreaves Review similarly requires significant resources. Prof Hargreaves made efforts to encourage entrepreneurs and SMEs to contribute to his Review. Similarly Consumer Focus made efforts to encourage creators’ rights organisations 144 The ICOMP Submission is available at www.i-comp.org/en_us/resources/resources/download/1027 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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to respond to the IPO consultation that followed the Hargreaves Review. Creators, entrepreneurs and SMEs are signiﬁcant stakeholders in copyright law, and the bedrock of the creative economy. Consumer Focus therefore would like to encourage the Culture, Media and Sport Committee to reach out to these stakeholders in particular to ensure that all relevant stakeholders get heard. 5. Consumer Focus also notes the considerable challenge of responding to a Culture, Media and Sport Committee inquiry which seeks evidence on the portfolio of the Department for Business, Innovation and Skills (BIS) and its executive agency, the IPO. We will therefore focus our written evidence on the areas of the inquiry that are within the Department for Culture, Media and Sport (DCMS) portfolio.

Barriers to Growth in the Creative Industries 6. Consumers are central to the creative industries, as they pay for creative content and services. While consumer spend on physical goods, such as CDs, DVDs, CD-Roms and books are still significant, consumer spend on digital creative content is becoming increasingly important. 7. However, as noted in our response to the recent DCMS consultation on the Communications Review, it is not correct to suggest that in the digital age ‘the ownership of content model (a physical CD at home) transforms into an access model (accessing the song from a cloud-based music service)’. As explained in greater detail in our response to Richard Hooper’s Digital Copyright Exchange feasibility study, a more accurate description of current developments in the music and book publishing market is that the physical ownership model (ie purchasing a CD or hardcover book), the digital ownership model (purchasing DRM free music MP3s or e-books) and various access models (such as Spotify and Kindle e-books) co-exist. 8. With regards to Hollywood movies digital ownership models have not developed because DVDs or digital films in the UK are always Digital Restrictions Management (DRM) restricted. However, with regards to non- Hollywood movies, digital ownership models have developed alongside the physical ownership model and various access models. Hollywood studios only started to license their movies for various access models in the UK very recently in response to regulatory and political pressure to update their business models and meet consumer demand. There is in our view a lack of competition and innovation in the UK markets for Hollywood movies, which should be addressed through a review of the communications market competition regime as part of the Communications Review.145 9. The argument that online copyright infringement by consumers is the most significant barrier to growth in the creative industries, ie consumer spend, is not supported by evidence. For example, the British music industry achieved significant digital revenue growth once it started to licence a broader catalogue of music to a variety of digital services, which provide different access models, price points and “extras” to consumers. It should also be noted that the British music industry achieved a bigger growth in digital revenues than the French music industry in the year Hadopi was fully operational. 10. According to figures published by SNEP, the Syndicat National de l’Édition Phonographique, France’s digital music industry grew by 25% to€110 million in 2011. Downloads generated€56 million of revenue, an 18.4% increase compared to 2010. Streaming and subscriptions grew by 73% to€39 million. Subscriptions services such as those from Spotify and Deezer grew by 89% to€26 million. Revenues from physical formats were down 11.5% to€412 million. Total revenues in 2011 were€617.2 million, down 3.9% from 2010. 146 11. According to figures published by the British Phonographic Industry (BPI), Britain’s digital music revenues grew by 24.7% in 2011 to £281.6 million, a third of record industry trade income. The BPI also reported a stronger growth in digital albums, which was up by 43.2%, and premium subscriptions, up by 47.5%. The BPI described the 3.4% decline in total recorded music trade revenues in 2011 to £795.4 million as “modest”, with revenues from physical formats having fallen by 14.1% to £513.8 million in 2011.147 The BPI highlighted that growth in digital revenues now off set two-thirds of the decline in income from physical sales. The BPI observed that: 12. “It is highly encouraging for the long-term prospects of the industry that the pace of digital growth continues to accelerate. British labels are supporting a wide range of innovative music services and music fans are embracing digital like never before. The record industry has continued to invest heavily in discovering and supporting outstanding British talent, which has helped sustain revenues in the face of difficult economic circumstances”. 13. The UK has the biggest e-commerce consumer market in Europe, and possibly globally.148 As the European Commission has recognised, growth in the e-commerce consumer market hinges on maintaining and building consumer trust, especially in relation to online payments. As outlined in our submission to the Office of Cyber Security and Information Assurance (OCSIA) to contribute to their discussion paper on “Safer Surfing”, trust in payment systems, and the ability of businesses to provide safe payment mechanisms, have 145 See Consumer Focus submission to the Competition Commission notice of revised provisional findings, Movies on Pay-TV market investigation 146 www.disqueenfrance.com/fr/cpg1–431127–385752-Le-marche-de-la-musique-enregistree-en-2011.html 147 www.bpi.co.uk/assets/files/BPI%20news%20release%20- %20record%20company%20trade%20income%20resilient%20as%20digital%20growth%20accelerates%20in%202011.pdf 148 See www.newmediatrendwatch.com/markets-by-country/18-uk/150-ecommerce cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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been key to creating a flourishing e-commerce market in the UK. Providing consumers with the ability to pay safely with their debit card online has been a key step in making the e-commerce market accessible to the majority of consumers. Non-card based payment mechanisms, such as PayPal, are a more recent, but equally important development. In turn, the ongoing development of cost effective micro-payment mechanisms is likely to facilitate the new digital business models of the future. 14. If the UK wants to remain at the forefront of e-commerce, it needs to remain at the forefront of online payment. Online payment is in our view the key area where OCSIA could bring stakeholders together to maintain and increase consumers’ trust, and reinforce the UK’s leadership position. 15. On the question “whether lack of co-ordination between Government departments inhibits this sector” Consumer Focus would offer the observation that “cross-departmental” is usually a euphemism for lack of progress. We are not aware that lack of co-operation among Government departments has inhibited economic growth in the creative industries. 16. However, the absence of a well functioning competition regime has inhibited innovation and consumer choice in some creative industry sectors. Effective competition can achieve important benefits for consumers such as choice, value for money, quality of products and services, and technological improvements as a result of innovation. Moreover adequate competition can reduce the need for intrusive regulation. But attempts to apply the existing competition regime to fast moving, converged, multi-layered communications, media and creative markets with a wide range of players have in many cases failed. Therefore Consumer Focus supports DCMS’s intention to assess within the scope of the Communications Review whether the existing competition regime responds effectively to the needs of rapidly changing communication and media markets.149 17. Commenting briefly on the question of “clusters” and “hubs”, in the context of competition and innovation, it appears to us that clusters of tech start-ups develop naturally. In the case of the Silicon Fen, many tech start-ups and companies have close links to Cambridge University, which the Times ranges as the 6th best university globally for engineering and technology. It is not clear to us what the benefit to competition and innovation would be from “encouraging a greater geographical spread of companies”. It is not apparent to us that BIS’ activities in relation to promoting the UK’s existing tech clusters and hubs has been “at the expense of encouraging a greater geographical spread of companies through effective universal communication”. Indeed if “universal communication” refers to DCMS’ work to ensure universal access to basic Internet and the role out of superfast broadband, we are not aware that this work has suffered as a result of BIS’ work in relation to clusters and hubs. 18. Consumer Focus welcomes the Government’s recognition that a healthy ecosystem of tech start-ups and SMEs is important for competition and innovation, which ultimately benefit consumers. As explained in greater detail in our submission to the Hargreaves Review for IP and Growth, the traditional creative industries increasingly depend on the technology industries for innovation. Most traditional creative industries have had a long standing and symbiotic relationship with technology companies, because consumers need hardware and software to enjoy creative content, such as recorded music or films. The value of an iPod to consumers may be greatly reduced if they could not use it to consume music, but the value of a CD to a consumer without a CD player would be equally minimal. 19. Both the creative and the digital technology industry are characterised by dominant companies with large market shares and monopolies, as well as a complex ecosystem of entrepreneurs, micro-businesses and SMEs. This is a side effect of the ‘network effect’, where a single standard emerges as dominant once sufficient numbers of consumers have adopted it. As such, one producer tends to dominate the market and their products become the ‘standard’ or the ‘gatekeeper’ for complementary products. Despite the dominance of some players, such markets can experience a high degree of competition through the ‘neo-Schumpeterian’ effect; if they are characterised by rapid innovation and paradigm shift. Competition is on innovation, not price of a product, and companies will invest in innovation and development to dislodge the incumbent with new technology. This leads to fragile, temporary and serial monopolies. 20. However, the ability of entrepreneurs, micro-businesses and SMEs to dislodge the incumbent is reduced if the dominant company can prevent network effects by, for example, constraining consumer choice through lock-ins and high switching costs, or by preventing other companies from producing complementary interoperable products. A ‘direct network effect’ includes the utility consumers derive from the number of other consumers who choose to use the same product. An ‘indirect network effect’ is the sale of complementary goods and services. Consumers will attach a higher value to products, for example an operating system, if a high number of complementary products, such as software applications, can interoperate with the product. At the same time companies are more likely to develop interoperable complementary products for an existing product which has attracted a high number of consumers, known as ‘positive feedback’. In economic terms companies that operate in markets with network effects produce products for a ‘two-sided market’, as they have to attract both consumers and producers of interoperable complementary products. 21. The European Commission has moved to apply competition law to dominant creative and technology companies who operate across borders in the internal market. However UK competition authorities have thus far failed to grasp how dominant creative and technology companies stifle competition and innovation in the 149 See Consumer Focus response to the DCMS seminar papers on the Communications Review (www.consumerfocus.org.uk/files/ 2009/06/Consumer-Focus-response-to-the-DCMS-seminar-papers-on-the-Communications-Review.pdf) cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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UK market.150 This is in our view a signiﬁcant failure and we therefore welcome DCMS’ resolve to assess whether the existing competition regime responds effectively to the needs of rapidly changing communication and media markets as part of the Communications Review.

The Failure to Implement the Digital Economy Act 2010 22. The Culture, Media and Sport Committee asks for evidence on the “impact on the creative industries ... of the failure, as yet, to implement the Digital Economy Act 2010, which was intended to strengthen copyright”. Consumer Focus notes that the explanatory notes to the Digital Economy Act 2010 for sections 3 to 16 on “online copyright infringement” state that the purpose of the Initial Obligations Code is “to reduce significantly the level of online infringement of copyright”. 23. The Digital Economy Act 2010 sets up an administrative copyright enforcement process by placing certain obligations on Internet Service Providers (ISPs). Consumer Focus is not aware of any evidence which would suggest that in the absence of the Digital Economy Act 2010 online copyright infringement through p2p filesharing (which is to our knowledge the only type of online copyright infringement by consumers that could be caught under the Act, for technical reasons), has led to an increase or reduction in copyright infringement by consumers through p2p filesharing networks. As the evidence sited above shows, the UK music industry achieved a greater increase in legal digital music revenues than France in 2011, when the French equivalent of sections 3 to 16, Hadopi, was fully operational. 24. The Culture, Media and Sport Committee will probably be aware that Consumer Focus has criticised the primary legislation for a range of deficiencies, which we believe largely arise from the lack of Parliamentary scrutiny the Bill received when it was rushed through Parliament in a wash-up process brought about by the 2010 general election. 25. One of these deficiencies, which in our view is central to the delay in implementing the Act through secondary legislation, is lack of recognition for wholesale and retail ISPs, and subscribers to ISPs which pass on internet access to consumers. A typical example is a library or university, which may receive wholesale internet access from an ISP, to pass that on to consumers, and at the same time received retail internet access from an ISP for the use of its staff. Similarly, it is not known whether a provider of public WiFi, where the WiFi provider such as The Cloud received wholesale internet access from an ISP, is a subscriber or ISP for the purpose of the Act. Since the Act received royal assent in 2010 the way in which internet access is provided through various intermediaries to consumers has complicated dramatically, which further adds to the difficulty in making sense of the primary legislation. 26. However, in our view Ofcom has failed to adequately address and resolve an issue which has been apparent from the day the Act received Royal Assent. It was only in response to considerable concerns voiced by public bodies and private business which provide internet access to consumers after the first draft Initial Obligations Code was published, that Ofcom set out to address the issue. However, as outlined in greater detail in our submission to Ofcom, we believe that the second draft Initial Obligations Code published by Ofcom has significant deficiencies in this respect, is likely to impose considerable legal uncertainty and thus cost on public bodies and private businesses, and therefore is likely to lead to a reduction of internet access to all consumers.151 27. Further delay has been caused by Ofcom’s failure to make provisions on the means of obtaining evidence and the standard of evidence in its first draft Initial Obligations Code. We eventually felt compelled to commission a legal opinion and technical expert report to advise Ofcom on the implementation of the Digital Economy Act 2010 through secondary legislation. Ofcom justified its failure to comply with the requirements of the primary legislation, and instead leave it to copyright owners to set their own standard of evidence for copyright infringement reports, on the basis that such an approach “does not involve the setting of arbitrary standards that we are not in a position to understand.”152 If it is not within Ofcom’s ability to understand technical evidence standards for online copyright infringement, it can appoint an independent entity to do so. Following our advice, Ofcom sought to address these issues in the second draft Initial Obligations Code. Consumer Focus has published the technical expert report we provided to Ofcom,153 and we can share the legal opinion with the Culture, Media and Sport Committee upon request. 28. Finally, Consumer Focus would like to highlight that the delay in implementing the Act though secondary legislation is to a large extent caused by the inability of DCMS to obtain parliamentary approval for the cost order, which determines the ISP/copyright owner cost split, and who pays for Ofcom’s cost. Without rehearsing 150 See Consumer Focus response to independent review of IP and Growth Part 1 the institutional foundations for competition innovation and growth (www.consumerfocus.org.uk/files/2009/06/Consumer-Focus-response-to-Independent-Review-of-IP-and- Growth-Part-1-the-institutional-foundations-for-competition-innovation-and-growth.pdf) 151 See Consumer Focus response to Ofcom consultation on Digital Economy Act 2010 Draft Initial Obligations Code (www.consumerfocus.org.uk/files/2009/06/Consumer-Focus-response-to-Independent-Review-of-IP-and-Growth-Part-1-the- institutional-foundations-for-competition-innovation-and-growth.pdf) & Consumer Focus response to Ofcom notice on draft Initial Obligations Code Digital Economy Act 2010 (http://www.consumerfocus.org.uk/files/2010/10/Consumer-Focus-response- to-Ofcom-notice-on-draft-Initial-Obligations-Code-Digital-Economy-Act-2010.pdf) 152 http://stakeholders.ofcom.org.uk/binaries/consultations/copyright-infringement/summary/condoc.pdf pg.19 153 Dr Richard Clayton, Online traceability: Who did that?—Technical expert report on collecting robust evidence of copyright infringement through peer-to-peer filesharing (www.consumerfocus.org.uk/publications/online-traceability-who-did-that- technical-expert-report-on-collecting-robust-evidence-of-copyright-infringement-through-peer-to-peer-filesharing) cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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in detail why three draft cost orders did not pass scrutiny by the European Commission, the Administrative Court, the Court of Appeal, the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee, it is perhaps most informative if the Culture, Media and Sport Committee considers the report by the Secondary Legislation Scrutiny Committee on the latest draft cost order.154 29. We believe that the most significant obstacle to the latest draft cost order receiving parliamentary approval is the fact that there has to date been no commitment from the music or the film industry to pay Ofcom’s set up cost of £6.8 million and pay Ofcom’s annual cost of £10.8 million. It should be noted that in France, the taxpayer foots the bill for Hadopi, which has a reported annual budget of€11 million, and that this budget has been reduced by 23% because Hadopi “has not fulfilled its mission of developing legal content offerings”.155 November 2012

Written evidence submitted by Buckinghamshire Thames Valley LEP 1.1 The Culture, Media and Sport Committee have launched an inquiry into support for the creative economy. The inquiry will examine whether and how government policy supports and strengthens the creative sector, whether it inhibits innovation in the sector, and how the success of the creative economy can be used to develop the UK as a global centre for investment and innovation in the creative industries. 1.2 Buckinghamshire Thames Valley LEP (BTVLEP) is the youngest LEP (Local Enterprise Partnership) in the country, having only been formally given approval by Business, Innovation and Skills (BIS) 10 months ago (January 2012). BTVLEP has established a strong governance structure, with a highly focused, entrepreneurial outlook and the resounding support of local businesses. 1.3 Buckinghamshire is a county rich in creative enterprise, which today, continues to support a dynamic and evolving Creative Industries sector. From its historical association with television and film production, to the variety of creative media spin-off businesses and its clusters of visual arts enterprises, the sector epitomises the entrepreneurial culture for which Buckinghamshire is renowned. 1.4 As a result, Creative Industries contribute approximately 10% of the industrial base of the county, employing upwards of 10,000 employees (2010 DCMS Creative Industries Economic Estimates). The sector continues to be recognised for its national significance as well, with Creative Industries experiencing the fastest rates of economic growth between 1997 and 2008 (ONS Economic & Labour Market Review, Jan 2011). Within Buckinghamshire itself, major companies such as the Pinewood Studios Group, National Film and Television School and a wide variety of creative SMEs and micro-businesses ensure that the county continues to have international significance.

How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games 1.5 Buckinghamshire was a host county for London 2012 and enjoyed many of the social, cultural and economic benefits of being closely involved in the organisation of the games. Collectively, the local partners involved in delivering Buckinghamshire’s input into the Games have identified seven key areas in which the county would wish to see a legacy generated from the games: — Continuing to promote the uniqueness of the Stoke Mandeville Brand. — Delivering a Permanent Sporting & Health Legacy. — Volunteering & Community Support. — Bucks as a Base for Major International Events & Stronger focus for Disability Sport. — Bucks the Accessible Destination for Visitors. — Stimulating the Assisted Living, Healthcare Technology and Creative Industry Sectors. — Continuing to Inspire & Educate a Generation. 1.6 In light of the above, and the question about how best to develop the legacy from the display of UK talent involved in the design of the Games, we would see the major opportunities falling into the last two categories. 1.7 As far as realising the economic opportunities are concerned, we see some further value could be generated from using the experience acquired, partnerships established and contacts made in the Assisted Living, Healthcare Technology and Creative Industry Sectors to enhance the growth of these sectors and strengthen our Inward Investment proposition. 1.8 In addition, building on the enthusiasm and excitement generated in the opening and closing ceremonies, and more generally in the design of the games, we foresee some opportunities to work with our local education 154 Seventh Report—Draft Instruments on Assets of Community Value, Housing Benefit, and Online Infringement of Copyright, and Health and Safety Fees (http://www.publications.parliament.uk/pa/ld201213/ldselect/ldsecleg/32/3203.htm#a4) 155 http://arstechnica.com/tech-policy/2012/08/french-anti-p2p-agency-hadopi-likely-to-get-shut-down/ cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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providers such as Bucks New University and Amersham and Wycombe College to strengthen and extend our technician and degree level provision.

Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector 1.9 In-depth telephone research undertaken by Bucks Creative Enterprise (BCE) into support needs of the Creative Industry Sector in Buckinghamshire largely reinforced the findings of Ancer Spa’s Strategic Framework and Action Plan for Development of the Creative Industries in the South East England. 1.10 Collectively, these studies reinforced the idea that the main barriers to growth in the sector included: — Reaching & finding customers. — Time limitations. — Access to finance. — Bureaucracy (particularly employment regulation). — Managing Cash-flow. — Finding suitable workspace. — Lack of skills. — Establishing the business overseas. 1.11 In light of these findings, BCE identified the needs of businesses in the Creative Industries as being: — Short courses on business skills, including specialised marketing, sales, business planning etc. — Specialist technical skills support, particularly around the latest industry technology developments. — Specialist business mentoring from practitioners with good contacts & market-knowledge. — Regular industry networking, particularly physical meetings. — Simplifying recruitment practices—making it easier to find and recruit part-time and freelance workers to cope with peaks in demand. — Access to affordable workspace. — Support and advice on protecting IPR. — Supporting businesses with access to finance. 1.12 BTVLEP believes government should address these issues by: — Continuing to encourage (and support) stronger collaboration between the private sector and the public sector on shaping educational provision, particularly at technician and degree level. — Encouraging UK Commission for Employment and Skills (UKCES) to develop and build upon employer-led skills mechanisms (like Graphics Interchange Format (GIF) and Educational Opportunity Program (EOP)), so that they are more suited to the creative industry sector. — Encouraging the creation and development of industry-led specialist mentoring, networking, and advisory services. — Simplifying regulatory burdens associated with employing freelancers and part-time workers. — Supporting the expansion of specialist incubation facilities and applied research centres (particularly linked to nationally important research and development centres of excellence like Pinewood Studios, Buckinghamshire New University etc). — Measuring the take up of mainstream finance solutions (like Regional Growth Fund, SMART Awards etc) by the creative industry sector and ensuring these funding mechanisms are sufficiently flexible for the needs of the sector, and developing more suitable solutions where they are not.

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infringements); that the “orphan works” proposals will be open to abuse and will severely undermine the sectors ability to commercialise its IP; and that metadata-stripping has still not been made unlawful.

1.14 As far as delays to the Digital Economy Act is concerned, BTVLEP recognises that the current digital copyright laws are suppressing the growth, contribution and export potential of the creative sector in the UK. However, we are also recognize the current impasse with (often foreign owned) ISPs is unlikely to be resolved quickly; and large sections of the current legislation appear un-implementable. To that end, we suggest government reviews its approach to online copyright protection and develops a more effective legislative framework that protects rights-holders but that also has the widespread support of the ISP community.

1.15 BTVLEP welcomes the strengthening of Copyright Law under the Enterprise and Regulatory Reform Bill.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget

1.16 BTVLEP believes strong evidence exists as to why tax incentives are important to the UK creative sector. For example, the ﬁlm tax relief, which is worth about 12% to 20% of core expenditure (depending on the budget of the production and whether a payable credit is claimed) is estimated to have led to £1 billion extra investment in British cinema.

1.17 BTVLEP would like to see the film tax relief restricted to only cover proper studio infrastructure and locations as opposed to “warehouses” and other non-core film infrastructure. We believe enacting these changes will help build on the UK’s growing international reputation in film production, boost exports, provide more jobs and stimulate much needed growth to the U.K. economy.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

1.18 As stated in section 1.12, BTVLEP believes that the government needs to establish a strong skills base to support the UK economy, by: — Continuing to encourage (and support) stronger collaboration between the private sector and the public sector on shaping educational provision, particularly at technician and degree level. — Encouraging UKCES to develop and build upon employer-led skills mechanisms (like GIF and EOP), so that they are more suited to the creative industry sector.

1.20 BTVLEP is generally nervous of advocating a “clustering” model. We remain unconvinced that Michael Porters theoretical model for developing “Business Clusters” has transferred that well to implementation/public policy development in the last 10 years. The inability of regions within the UK to create new business clusters demonstrates how difﬁcult it is for “cluster theory” to be implemented in practice.

1.21 BTVLEP is much more supportive of a “hub” based model, which needs to be supported by a favourable tax regime and skills environment. Our experience of working with Pinewood Studios demonstrates to us how important the combined issues of Infrastructure, Skills and a favourable taxation regime are to supporting important assets like Pinewood.

1.22 Given the above, we would urge the government to create the kind of national regulatory environment that enables the important creative industry ‘hubs’ in the UK to thrive and prosper. In an ideal world, these important assets need a national policy designation, which enables them to develop and respond to the global pressures and threats they face in such a way that supports the UK’s growth aspirations.

The work of the Creative Industries Council and other public bodies responsible for supporting the sector

1.23 BTVLEP supports the work of the Creative Industries Council, and recognises that the strengthening of such mechanisms is a core recommendation of the Heseltine Review.

1.24 BTVLEP supports many of the recommendations in the Heseltine Review, but would also urge central government to ﬁnd a way of getting the LEPs and Industry Councils to work together more effectively in the pursuit of growth. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by Creative Access The media cannot reflect society if society in not reflected in the media. Creative Access is delighted to have the opportunity to submit evidence to the Culture Media and Sport Select Committee’s Inquiry into Support for the Creative Economy. Our evidence is focused specifically on the question of skills and the pool of talent from which our creative sector currently recruits. There is a marked lack of ethnic diversity in the creative sector’s recruitment processes, which remains a significant problem throughout the media and creative industries.

Background The riots in London in the summer of 2011 were the tipping point. Watching hours of white middle class commentators failing to explain the confusion and chaos on our streets offered little insight to the viewer; and embarrassment to the media industry. It is widely acknowledged that there is a huge under-representation of people from black, Asian and other minority ethnic backgrounds (BAME) working in the media and creative industries. But the events of summer 2011 have provided a catalyst for action. Action is needed on the demand side—to open up access to the media industries. It is also needed on the supply-side—to encourage and recruit high quality Black, Asian and Minority Ethnic (BAME) candidates. Building a creative industry that is more representative and more insightful regarding the needs and wishes of the whole population, is vital both for the economic viability of the sector itself and for the wider health of our society.

About Creative Access Creative Access is a charity156 established in 2012 which aims to provide opportunities for paid, year-long internships in the creative industries for talented young people from black and Asian backgrounds, with a view to improving their chances of securing full-time jobs and, in the longer term, increasing diversity and addressing the current imbalance in the sector. Since the launch of Creative Access in April this year we have secured over 70 placements with media companies, with our first interns starting this autumn. The scheme is already working for both the young people concerned and our industries. Some comments from our very first group of trainees and the employers working with us are attached at appendix 2. We know the Creative Access approach can deliver. What we need now is for the government to seize the opportunity and support us so that we can expand the initiative and sustain that delivery. For the benefit of the young people concerned, for the creative sector and for society as a whole.

Why Diversity Remains a Problem for the Media and Creative Industries The diversity of Britain’s arts and culture is not reﬂected in the representation of the creative sector. Despite over 30% of London’s working age population being from BAME backgrounds, less than 6% of the creative industries workforce is BAME.157

At leadership levels the proportion of people from non-white backgrounds falls to as low as 3%. The pattern is repeated across the individual creative sectors with just 5% of the workforce in television, 5% in radio and 156 Charity Registration No. 1146822 157 2010 Creative Media Workforce Survey cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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3% in publishing coming from BAME backgrounds. This is despite many years of efforts by individuals and organisations designed to improve ethnic diversity within the industry.

Diversity is Economically Important for the Creative Industries If this problem is not tackled, in the long run it is the creative sector that will lose out: in not recruiting black and Asian workers it is limiting its labour resource and it will be unable to understand and sell back to signiﬁcant proportion of the of the UK population that is non white. The proportion of graduates from London Universities from BAME backgrounds is growing every year158:

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There is a vast pool of talent out there and the creative sector is currently failing to tap into it. It is widely recognized that diversity enhances the creativity within an organization. From a creative company or organisation’s perspective it makes both commercial and ethical sense: if you want your production to link to your audiences then your audiences have to be part of the production.

Why the Problem Persists From Creative Access’ research among media companies and young people looking to find ways into creative positions, it is clear that there are many reasons why access to the creative industries for young people from ethnic minority backgrounds is poor. These include: lack of awareness of the opportunities available; the appearance of a closed shop based on networks of personal contacts, mentors and role models; and the system of “expenses only” internship placements for extended periods. In some cases these factors may lead to a lack of self confidence, which could be exacerbated if the young person is the first person in the family to attend college or university. What is particularly clear is that there is no single place for BAME young people to look for training and employment opportunities in the creative industries and that is where Creative Access comes in.

How Creative Access Works Creative Access is designed to match up talent with opportunities. On the demand side, we are creating an extensive network of partner companies in ﬁlm, music, publishing, public relations (PR), journalism and more. A list of our current partners is attached as appendix 1. It includes broadcasters (including ITV, Sky, Channel 4 and NBCU), television producers (Pact and its member companies), the music industry (BPI and Sony), Publishing (Random House and Harper Collins); Newspapers (The Times); Theatre (ATG and Stage 1) and many more. In each case, the media company is asked to offer a six to 12 month paid work placement and to contribute at least 50% towards a salary based on a minimum of the London Living wage (approx £15,000 per year). As a charity Creative Access raises funds to contribute the remaining 50%. Every placement is given a senior mentor for the duration of their internship and participates in a training programme both prior to and during their internship. On the supply side, we are widening the pool of talent by actively reaching out and recruiting the very best candidates from ethnic minority backgrounds.159 We recruit through student unions and societies, university 158 Source: HESA, June 2012 159 Creative Access is a strategic initiative which complies with its obligations under the Equality Act 2010 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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careers services, specialist colleges and via job centres. For recruitment and training services Creative Access work is in partnership with two specialist charities SEO London160 and New Deal of the Mind,161 two organisations with many years of experience in recruitment and training services among the communities we are reaching out to.

Our Ambition Creative Access aims to introduce 250 high quality candidates (graduate or equivalent standard) per year (for the next three years) into the Media industries from the black and Asian communities. By facilitating access for BAME graduates, in this way our ambition is to change the cultural mix in our media industries so that the media can better reﬂect society as a whole. Evidence from other similar schemes suggests that a over 70% of those taking part on work placements go on to ﬁnd full time work either with the company itself or elsewhere in the same sector. We hope the changes we are trying to bring about, will create their own sustainability, with those who succeed in securing jobs in the sector helping in turn to bring others from under-represented communities in alongside them.

How Government and Parliament can Help With the employing firms meeting half the cost of each person they take on, we have the private sector support. We are working to secure matching funding through a number of other private and charitable routes. But we are also looking to involve the Government financially to help us meet our ambitious plans and bring about the scale of change that’s clearly necessary, and give Creative Access the stamp of official approval and ensure that it is taken seriously at the highest levels in the media. Therefore any recommendations the Committee can make to encourage the government and the creative industries more widely to take seriously the huge under-representation of people from BAME backgrounds and support initiatives like Creative Access will bring a valuable boost—both to the young people we are helping and to the economic and cultural health of the creative industries overall. November 2012

APPENDIX 1 Our partner companies include: Brunswick Big Talk BSkyB HarperCollins ITV Studios MARV FILMS NBCU/Carnival The Rights House Random House Sony Pictures United Agents PACT Endemol Tiger Aspect All 3 Media Shed Media Wall to Wall Hat Trick Productions Shine Zodiac Keo Films Freemantle OMP plc BPI Cherry Red Quietus Fresh One Best Before Records Channel 4 Two Four The Times Freud Stage One Independent Talent Ambassadors Theatre Group

APPENDIX 2 Dominic Kay, an intern at Sky—”I have had the amazing opportunity to take part in a unique graduate scheme at Sky News. It is a wonderful placement and is proving to be an informative and enjoyable experience, where I am always on the go and learning a lot. I think often within Britain the workforce of big organisations and corporations do not accurately represent our demographic and Creative Access crucially contributes to the rectiﬁcation of this imbalance.” Helen Efrange, an intern at United Agents—”Through Creative Access, I’m now working as an assistant to a literary agent at United Agents. Most days I pinch myself because I am getting paid to do what I love, which is essentially to read. I am certain that I would not be where I am without the opportunity provided by Creative Access. There is an astonishing lack of diversity within the publishing industry. To be able to enter the world 160 www.seo-london.com 161 www.creativesociety.co.uk cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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of publishing one has to be prepared to work unpaid for months on end and often, a foot in the door is dependent on who you know. This set up leaves many ethnic minorities out in the cold. I am the only (and maybe first) minority face within the book department, but hopefully I will not be the last. I not only think this scheme is helpful, but a requirement within the industry. It’s the beginning of a path that will hopefully begin to change the face of publishing as it most certainly has changed things for me. A year spent working here will definitely put me where I need to be in order to successfully advance within this sector.” Matthew Vaughan, Film Director—”There’s such a culture of ‘friends and family’ in the movie world and I know how important it is to be given a break. Creative Access found us a shortlist of people who all had a passion for film-making, but little or no experience. The intern we chose has impressed everyone on the crew of Kick-Ass 2 and I can see a bright future ahead of him in the film industry.” Victoria Barnsley OBE, CEO, Harper Collins—”For me, one of the key strengths of Creative Access comes from working together with other employers across the creative industries. This has got to be the way ahead, helping us to up our game creatively, appeal to a broader audience and thereby ensure continuing healthy growth.”

Written evidence submitted by Creative England Creative England welcomes the Select Committee’s decision to hold this Inquiry. Creative England provides practical support for individual creative entrepreneurs and content businesses in all the regions of England outside London and, on the basis of that work, seeks to contribute to the development of effective policies that will help grow the creative economy of England. Our particular focus is on three of the five sectors identified by your committee in connection with this Inquiry namely film, television and games. Creative England is supported by the DCMS, via the British Film Institute (BFI), and the bulk of our programme costs and investment funds currently come from the Business, Innovation and Skills (BIS) Regional Growth Fund (RGF), the National Lottery, various European sources, local authorities and private investors In its first year Creative England has worked with some 500 micro-businesses and small and medium-sized enterprises (SMEs) in these sectors, providing mentoring for skills and growth, enabling networks, fostering clusters, providing investment finance as well as assisting companies in gaining access to private finance and access to new markets. We are represented on the government’s Creative Industries Council and take a lead role in its “Access to Finance” working group. We work in partnership with many companies in the private sector and with a broad range of institutions in the public sector including National Endowment for Science, Technology and the Arts (NESTA), the BFI, Creative Skillset, the Arts and Humanities Research Council, the Technology Strategy Board, the BBC, Channel 4, local authorities, Local Enterprise Partnerships (LEPs) and universities. In this submission, we concentrate on six of the issues raised in the Committee’s call for submissions:

“Barriers to growth … such as difficulties in accessing private finance …” The generation of intellectual property in the Creative Industries tends to come from a large number of small or start-up enterprises. These companies rarely have fixed assets and the intangible assets they generate are often difficult to value, making it difficult for financiers to invest if they do not understand the business models of the sector. There is ample evidence, for example in the 2011 report commissioned jointly by BIS and Warwick University, that smaller businesses in a range of creative sectors, including film, TV and games experience disproportionate difficulties in raising finance. In our first report to the Creative Industries Council (CIC) on this issue we identified the common challenges as: — Imperfect information on these businesses leading to high costs of assessing loan risks in the case of creditors and high costs of due diligence for investors. — Lack of evidence of financial track record and additional loan collateral. — Significant difficulty for start-ups and small businesses seeking small sums of money, again because the due diligence costs are too high to justify the investors’ time. Typically this results in a funding gap for businesses seeking anything between £250,000–£5 million Other factors include: — An absence of good quality data on the sector and the variations within different sub-sectors. — The lack of recognised frameworks to assist financiers IP and business values; skills and business abilities. — It’s a “hit” business and therefore difficult to predict success. — Fear—too many financiers fear that creative entrepreneurs are more focused on creative success than commercial success. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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“Whether lack of co-ordination between government departments inhibits this sector” While the establishment of the CIC is a welcome and positive step forward in inter-departmental co- ordination, there is still much that could be done to improve the engagement of BIS and the Treasury with the creative sector, the contribution it makes to growth, employment and innovation, the contribution it makes to other parts of the economy, and its wider social and cultural impacts. There appears to be a lack of understanding on how to value IP-related businesses and many of the excellent interventions and programmes developed by successive governments to support the business sector generally fail to be taken up by creative businesses. The apparent “exceptionalism” of much of the creative sector, itself the root of the scepticism that still exists amongst some officials in BIS and the Treasury, is re-enforced by the fact that its sponsoring department is DCMS. BIS feels little or no sense of “ownership” towards the creative sector and this is reflected, for example, in the fact that there is relatively little appetite or interest in BIS to examine the growing number and significance of collaborations between creative content businesses (especially in the games sector) and other sectors of the economy from health and well-being to hi-end manufacturing and the delivery of public services.

“The extent to which taxation supports the growth of the creative economy … and whether the targeted tax reliefs in the 2012 Budget should be extended” We welcome the new tax reliefs proposed in the 2012 budget. In our view, arguments for revising or extending them should be based on three main criteria; (1) an understanding of the pace and extent of convergence across parts of the creative sector, especially digital media, and the consequential need to ensure that the parameters of tax reliefs accord with the way in which businesses actually work and trade. In this context, the recognition that the dividing line between a “feature film” and a high quality TV drama is, for all practical purposes disappearing, was sensible and is to be welcomed; (2) the international context. Films, games and some television genres all exist in an increasingly competitive global market and one in which a growing number of governments are targeting growth in their creative sectors as a priority, whether for sound economic reasons, or for national vanity or because of a belief that they are essential feedstock for the wider “knowledge economy”. Without getting into a crude global game of tax-relief auctions, UK tax policies for these sectors need to be planned with full and continuously updated understanding of the wider strategies for creative industry growth being pursued by the UK’s competitor countries, large and small. (3) Changing business models. The current tax reliefs are predicated on attracting inward investment into the UK. As business models change interventions need to be continually reviewed to ensure that they respond to the change in business models within the sector, rather than solely as a yard-stick for international competition—important though this is. Both these criteria require a relatively detailed, systematic and continuous flow of reliable data and analysis to ensure that they are appropriately targeted and, if necessary, fine-tuned. Too often in the past, arguments for special tax relief have been, and have been seen by the Treasury to be, nothing more than industry lobbying. So, the need is for data and analysis that is not just evidence-based but can be trusted as objective, underpinned by government itself or by reputable independent agencies.

“The importance of clusters and hubs …” The importance of clusters has long been recognised and accepted as a basis for policy and investment at local and national level. As a feature of some creative business sectors and some towns, cities and regions, they have self-evidently played a central role. But much of the policy-making and investing has been based on anecdotal evidence alone and we welcome the growing range of more objective and rigorous analysis now being undertaken in this area, in which we are taking a leading role. We have a developing research programme in partnership with the Arts & Humanities Research Council (AHRC), Economic and Social Research Council (ESRC) and Engineering and Physical Sciences Research Council (EPSRC). We are lead partners in a European programme, Cluster 2020, which is building a solid evidence-base for the impact of clusters in cities and regions across the EU. And we have recently completed, with the AHRC, an analysis of the relationship between universities and creative clusters in England which shows that while many HEIs express interest in the beneﬁts of clustering with local creative businesses, the reality is that depressingly few are actually engaged in practical collaborations that generate revenue, value or jobs. We welcome other initiatives of the AHRC and the Creative Industries KTN, supported by the Technology Strategy Board. But much more needs to be done if the UK is to maintain any kind of international lead in developing closer links between formal education and the creative economy, or understanding some of the other dynamics that promote the growth of effective clusters.

“Whether there is too much focus on hubs at the expense of greater geographical spread …” A valid repose to this question is obviously dependent on the work referred to in the pervious paragraphs. The undoubted signiﬁcance of clustering, and simple common sense, suggests that identifying and nurturing centres of excellence is a necessary part of any balanced strategy for support of the creative industries. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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However, two other points should be made in this context; the first is that for some businesses, or for some parts of their business processes, it is equally obvious that “clustering” can be achieved in the virtual world as well as in the physical world, underlining the extent to which an open and inclusive strategy for hi-speed broadband access is important for the creative economy. The second point is that creative businesses are disproportionately dependent on individual creative talent and “talent is everywhere”. The key issue for public policy, therefore, is to develop networks, escalators, ladders—or whatever they may be called—that optimise the opportunity for talent to find its place and achieve its full potential. This is one of our central tasks at Creative England and we are actively exploring the range of partnerships and networks that can most effectively—and cost-effectively—connect talent, wherever it is located, with business environments in which it can flourish.

“The work of the CIC and other public bodies …”

While we welcome the establishment of the CIC as strong evidence of the government’s commitment to and interest in the creative economy, its membership highlights the extent to which the terms “creative industries” and even “creative economy” are less than precise, concealing a multitude of different and sometimes competing policy agendas between content businesses and service businesses, between the multitude of micro- businesses at one end of the spectrum and the handful of very large, (and mostly non-UK owned) business at the other; and between those that are publicly owned or have a speciﬁc cultural and social remit and those that are purely commercial. We welcome the valuable work that has already been undertaken by the smaller working groups set up by the CIC, including the “Access to Finance” group in which Creative England has played a leading role, and we welcome the ad hoc working groups established by Ed Vaizey to further underpin the value of the CIC by, for example, re-visiting the accepted deﬁnition of the creative industries; looking at systematising the collection of data and the international marketing of the creative sector; and building on the synergies between the handful of publicly funded agencies that support creative industries (including Creative England). These smaller and more focused groups could make a substantial contribution to a policy-making environment that is better informed, better targeted and better organised.

Our view, as expressed above, is that further initiatives are needed to get the BIS “machine” more fully engaged in seeing the creative industries, as currently defined, as an integral part of the UK economy. Two issues are worth mentioning in this regard; the first, referred to above, is the growing phenomenon of cross- overs and collaborations between creative content businesses and a much wider spread of businesses in technology, health and well-being, hi-end engineering and many areas of design; the second is the continuing failure to harness the capacities of creative individuals and SMEs in delivering public services. The work of the Design Council with the NHS has been a shining exception. Despite this, and other modest initiatives, the public procurement system fails to exploit the opportunities that undoubtedly exist for reducing costs and, at the same time, improving the quality of publicly purchased goods and services by using the talents of many of the UK’s most creative entrepreneurs. Indeed, the system positively discourages the engagement of creative entrepreneurs. This issue was highlighted by Sir George Cox in his 2005 report on innovation, and has been referred to by the Prime Minister and other senior government figures on a number of occasions, but has not yet been addressed.

We welcome many of the recommendations in Lord Heseltine’s recent report “No stone unturned in the pursuit of growth”. There is little doubt that the most effective public policy instruments for supporting growth and innovation in the creative economy over the last 10 or 15 years have been at local and regional level, or that the most effective of them was the system of Regional Development Agencies (RDAs). While we welcome the contributions that some LEPs are making (Creative England has productive and growing partnerships with several of them) they fail to match the range, reach and depth of support that the system of RDAs, at their best, provided in the regions. Building alliances which can work effectively at regional or certainly city-region level is, in our view, an urgent need. We attempt to do this in our own ﬁeld of activity, building partnerships with LEPS, local authorities, universities, broadcasters, other public agencies, major companies and private investors. Our strong recommendation is that the government, working with the grain of Lord Heseltine’s proposals, should explore ways of incentivising and assisting these broad partnerships. In this context, the public procurement issue mentioned in the previous paragraph, has an obvious role to play.

It is clear that on a political level the importance of the Creative Industries as drivers of growth and innovation is recognised, as evidenced by the establishment of the Creative Industries Council. However, on a very practical level our experience has been very simply an absence of ofﬁcials within the government’s main department for growth—BIS—dedicated to and knowledgeable about the creative economy. Creative England would welcome an opportunity to work more closely with both government departments to provide the executive support required to support this sector more effectively.

We would be happy to provide further evidence and thinking on any of these issues if the Committee feel that would be useful. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the Advertising Association Summary — Advertising is a major creative industry and a critical source of funding for other creative industries. It makes a powerful economic contribution by facilitating interaction between business and consumers. — Advertising in the UK is responsibly practised and well regulated. However, there are regulatory threats to advertising growth. We believe advertising self-regulation is a successful system and must be maintained as the media landscape shifts and advertising technologies develop. — We are deeply concerned by the draft EU Data Protection Regulation, which could damage direct marketing, internet advertising, and the UK economy both off and online, and call for greater engagement from UK representatives in Europe to meet this threat. — More generally, in debates that touch on advertising or its regulation, we believe there needs to be more awareness of how advertising works and its importance to the creative industries and the economy, and a greater focus on evidence. — Advertising beneﬁts from creative hubs and clusters, but we take an expansive and ambitious view, believing the UK can be a creative hub for the rest of the world. We make suggestions, including across skills, exports and inward investment, that would help support this goal.

The Advertising Association 1. The Advertising Association (AA) represents all sides of the advertising and promotion industry in the UK—advertisers, agencies and the media. We promote and protect advertising in its broader sense: from advertising in all media to direct marketing and promotional marketing. We communicate its commercial and consumer beneﬁts and we seek the optimal regulatory and self-regulatory environment. Our goal is that advertising should enjoy responsibility from its practitioners, moderation from its regulators, and trust from consumers. 2. We take a threefold view of advertising’s contribution to the creative industries and the economy: (i) Advertising is the second largest creative industry by Gross Value Added (GVA), and growing, as well as the second largest by employment.162 Advertising spend was worth more than £16 billion to the UK economy in 2011.163 Marketing communications encapsulates a wide range of dynamic, ever changing activities. Including sponsorship, production spend, and all forms of marketing, its overall economic contribution is as much as £30 billion, which breaks down as below.164

(Source: IPA Bellwether) Government ﬁgures show advertising employs 268,000 people.165 Advertising methods are continuously evolving and new businesses and models have emerged since this methodology was established, so we believe thousands of employees are not captured in these ﬁgures— such as those working in online intermediaries that facilitate the buying and selling of online advertising space. 162 DCMS Economic Estimates 2011 163 AA/Warc Expenditure Report 164 IPA Bellwether 165 DCMS Economic Estimates 2011 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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(ii) Advertising is not only a major creative industry in its own right, but unique in that it funds other creative industries as well. Advertising spend in 2011 was as follows: MEDIA £MILLIONS PRESS* 4,093.2 TV** 4,986.6 RADIO** 549.7 OUT OF HOME* 947.7 CINEMA 171.3 INTERNET* 5,051.2 DIRECT MAIL* 1,728.6

* Includes production costs ** Includes sponsorship and production costs (Source: AA/Warc Expenditure Report) This is a major investment in creative content and innovation, while internet spend in particular pays for much of the free content and services available online and invigorates the UK’s £121 billion internet economy. (iii) Advertising drives the broader economy. It’s core role is allowing the interaction between businesses that make and sell products and services, and the people and businesses that use them. This process helps meets consumer needs while inspiring competition, productivity, efﬁciency, and innovation. Analysis suggests that through such processes, advertising fuelled about 15% of GDP growth in the G20 over the past decade.166 We address the Committee’s areas of interest in turn:

“How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games” 3. We see advertising support for the Olympics and Paralympics (as well as continuing support for sport) as an example of the kind of contribution marketing communications makes to society. Sponsors raised £700 million of Locog’s £2.2 billion budget. Advertisers not only helped the staging of the Paralympics, but also showcased disabled athletes alongside able bodied ones which drove interest and awareness. Most of Channel 4’s broadcasting, including its coverage of the Paralympics, is funded by advertising and sponsorship. We make suggestions for building on advertising’s contribution below.

“Barriers to growth in the creative industries—such as difﬁculties in accessing private ﬁnance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector” 4. Advertising’s major barriers are regulatory threats at both domestic and European levels.

Regulation 5. The Advertising Association strongly believes that self-regulation is the most effective mechanism for maintaining standards. The Advertising Standards Authority celebrated its 50th anniversary this year and we note the high levels of respect and recognition that it enjoys from the public. The self-regulatory system is an asset for consumers and government, who can be conﬁdent that advertising is legal, decent, honest and truthful without any cost to the taxpayer. 6. Self-regulation must remain as the bedrock of UK competitiveness in marketing communications, and in encouraging advertising and advertising dependent businesses to export and grow. As the online economy grows and digital advertising models evolve, only proportionate, evidence-based self-regulation will be able to move with the pace and subtlety required to maintain our advantages.

Government and policymakers 7. Despite this, we are often concerned by mixed messages from policymakers on the value of advertising to the UK and how conﬁdent they are in its regulation. 8. We are concerned by the tone of discussion around marketing’s role in social issues. Because advertising is, by deﬁnition, very visible, it acts as a lightning rod in public policy matters. There are regular debates about whether marketing restrictions should be introduced across a range of products or services. All too often, this is without reference to evidence that regulatory intervention would achieve anything; the cost any restrictions represent to the creative industries and the economy; and existing, effective codes of practice, which are greatly preferable to heavy-handed government mandates. 166 McKinsey & Company, Advertising as an economic growth engine (2012) cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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9. As a result, we would prefer to see a clear evidence threshold established for media regulation, and greater cohesion between departments looking at advertising’s economic and cultural value (DCMS, Treasury and BIS), those considering the role marketing plays in social contexts (Health, Education and the Home Ofﬁce), and those making decisions over procurement (the Cabinet Ofﬁce).

10. While the DCMS generally supports advertising’s value, this position is not always recognised by other departments. We accept the need for spending reductions but are disappointed that the Cabinet Ofﬁce framed cuts to ad budgets as a reduction in “wasteful” spending. Though government ad spend has fallen to around £555 million from a peak of £732 million in 2009, it is now forecast to grow again. This is a valuable investment in the country’s advertising infrastructure and entirely appropriate given the value of such spending in meeting public policy goals. We would welcome more creative thinking about how to maximise value from public spending, such as whether the companies making ads for the government could retain secondary IP rights, rather than Government taking all IP rights even when it has no intention of using them.

Data and Digital

11. Like the rest of our media and communications, advertising’s future is increasingly personal, portable, interactive and social. This process is driven by data and advances in technology.

12. The UK is a leader in commercial media, and its prominence is particularly apparent in digital advertising. A third of the UK’s ad spend is digital, a higher proportion than anywhere else in the world. The UK accounts for a quarter of Europe’s€21 billion annual digital ad spend. This is an enormous investment in our fast growing online economy and helps pay for content and services online.

13. The UK’s strengths in creativity and innovation remain at the heart of these developments, and are underpinned by a successful self-regulatory system. However, we must ensure that as technology advances and advertising methods adapt, the regulatory framework does not shift in a way that impacts our advantages.

14. For this reason, we are deeply concerned by the draft EU Data Protection Regulation and believe it must be urgently addressed. Among other things, the Regulation widens the deﬁnition of personal data, requires explicit consent to use it, and introduces a technically unfeasible “right to be forgotten” for consumers. We believe these rules unnecessarily bring swathes of new information into the regulatory net. This will badly hamper the smooth running of the internet (ie with constant pop-ups requesting to use information), and will undoubtedly impact the UK’s £7 billion direct marketing and internet advertising industries and the hundreds of thousands of people they employ.

15. The Regulation will not only affect online advertising, a key funding mechanism for online creative content, but will directly impact the operation of creative enterprises trying to deliver their content digitally, as well as businesses in other industries that are also making more of their services and products available online. There will be further serious implications for employment and growth in ofﬂine direct marketing ﬁrms, such as direct mail, which accounts for a quarter of the Royal Mail’s business.167

16. While we agree it is time to update data rules, it must be done in a way that balances the rights of consumers against the needs of business.

17. We are reassured that the DCMS and the MoJ are treating this issue as a priority but believe that across British representation in European legislative bodies, there must be a much more concerted effort to meet this threat.

Inward investment, exports and access to ﬁnance

18. It is important that government continue to monitor the tax and investment incentives available internationally, to ensure that we do not fall behind other European advertising and media hubs.

19. Access to finance is not considered a primary concern by advertising agencies, mainly because advertising businesses enjoy low capital start-up costs. The agency sector is thus dominated by entrepreneur driven SMEs. However, for media and advertising start-ups developing new technologies and innovations, there are barriers for scaling, and these businesses would potentially benefit from easier access to finance.

20. Advertising is already a major service exporter, worth £1.5 billion in 2009.168 We believe this could be encouraged further through global marketing of the UK as a centre for commercial communications and branding by UKTI. 167 Direct Marketing Association, Putting a price on direct marketing (2012) 168 DCMS Economic Estimates 2011 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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“The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament)” 21. Adverts frequently involve the licensing of copyrighted material. For instance, many adverts licence music for use in broadcast or ﬁlm ads. PRS reports that in 2010, advertising and sponsorship accounted for £94 million of revenue for the music industry.169 This is an example of advertising funding of the creative industries through the copyright system, and in the case of music helped to offset declines in other types of revenue. Advertising also provides critical exposure for artists and stimulates interest in their work. 22. The integrity of the copyright regime is a major concern for the media owners among the AA’s membership. Copyright infringement erodes their ability to attract audiences and invest in content, which in turn may have implications for advertisers and agencies. 23. The copyright system must balance the importance of protecting copyright holders against the need for a system that does not overly impede advertising agencies who depend on appropriate access to copyrighted material.

“The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget” 24. The AA is concerned that the speciﬁc exclusion of advertising from the creative tax relief consultation suggests a low appreciation of the scale of advertising’s contribution to the creative economy. We note strong support among the agency services section of our membership for widening tax reliefs from the 2012 Budget to include advertising productions.

“Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this” 25. Advertising will need 20,000 new skilled workers by 2014.170 While “advertising” is considered synonymous with the agency services sector, this is only one part—albeit an important one—in a much wider story, which also features brands and a multitude of commercial media channels. “Advertising” encapsulates a very wide range of activity spanning the work of creative, media planners, statisticians, coders and analysts, to name a few. The employees ﬁlling these roles are drawn from all educational backgrounds, from school leavers to post-graduates. 26. There is synergy between advertising’s requirements for technical and creative talent and that of other industries (as outlined below). However, meeting advertising’s skills needs means more than prioritising creative subjects. There must be a broad emphasis on a range of skills, including quantitative and computer based. This is particularly important as digital and data-driven marketing comes to account for an ever greater share of advertising spend. We should also ensure that university courses are better attuned to recent developments in media and communications. 27. There needs to be an immigration regime that is ﬂexible enough to ensure businesses can access the skills they need from abroad, particularly where businesses wish to expand into the UK or serve overseas markets. Immigration is a particular impediment for our large, international agency groups who need a consistent throughput of talent to maintain their leading positions.

“The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication” 28. As noted earlier, advertising is only partly defined by creative agencies. It is also a funding model for the creative industries, part of the innovative business culture that makes the UK a world leader in creativity, and a commercial activity critical to the 60% of the economy built on consumer spending. 29. Thus, firms operating in the “advertising industry” are already integrated with those in other industries. They contribute to the creative industries by funding creative work, but also invest in many of the same personnel and services. For instance, the screen industries depend on a highly developed infrastructure spanning everything from creative and technical talent to studio and post-production facilities. This means advertising productions represent a major investment in exactly the same infrastructure that the screen industries depend on. Advertising also invests in the same talent—for example, among British Academy Award winners for Best Director, Tom Hooper and Sam Mendes have both directed adverts. For this and other reasons, advertising firms are inclined to locate in the same areas as other creative businesses. 169 PRS, Adding up the UK Music Industry 2010 (2011). 170 Credos projection based on DCMS data, Feb 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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30. We feel that this intimate relationship should be better recognised by policy makers. Whether we are looking at ﬁnance, skills or infrastructure, support for advertising directly translates into support for the rest of the creative industries. 31. We appreciate the advantages of nurturing hubs and clusters for companies making advancements in digital and online technologies, which is extremely important to maintaining our leading position in digital advertising. 32. As explained, advertising overlaps not just with other creative industries, but with businesses operating in all parts of the economy and all over the country as well. The UK in itself has the potential to be an international “hub” for businesses with advertising and media dependence, or which produce branded goods or services, and need to locate global or regional functions (such as marketing departments). For instance, 127 commercial media channels already broadcast to overseas markets out of the UK. We also note that advancements in broadband coverage make it easier for agency operations to develop in the regions. 33. For these reasons, we believe that hubs already play an important role in driving advertising, and can continue to do so, but that we should also be ambitious on a national and international scale.

“The work of the Creative Industries Council and other public bodies responsible for supporting the sector” 34. The AA is represented on the Creative Industries Council along with a number of our members. We support the collective work of the CIC and its continuation under an industry chairman with ministerial representation. The AA is helping to deliver some of its projects, including the setting up of a website to showcase British creative work internationally. 35. The Central Ofﬁce for Information was closed earlier this year as a result of reductions to public budgets. We are understanding towards the reduction in government spend, but were disappointed by the loss of the COI, which was a valuable source of marketing expertise close to government. As government advertising spend remains an important source of income for the industry, we remain positive about the potential for the Government Communications Centre, though we are still anxious that there be full awareness at the heart of government of how broad marketing communications is, how it operates, and the overall role it plays in the economy. November 2012

Further written evidence submitted by the Advertising Association During your visit to advertising agencies in Soho last week, when we were at Spotify, industry concerns about the EU’s proposed Data Protection Regulation were raised. You asked me to provide you with a short brief, which is enclosed. While we understand the need to update the law to take account of digital technology, the European Commission’s proposals could significantly burden UK businesses, stifle innovation and hinder growth in the advertising sector. The proposals would severely impact the operation of the internet and on the UK’s fast- growing digital economy, which is the market leader in Europe. It is estimated that the UK market will represent 30% of European e-commerce in 2012. The MOJ’s impact assessment cites a recent study by Booz&co which found that privacy regulations requiring opt-in before any data is collected would reduce investors’ interest in advertising technology companies by 65%. The Internet Advertising Bureau estimates that the EU proposals may cost the UK an estimated £633 million in lost advertising revenues as companies reduce their advertising expenditure. There would clearly be severe consequences for the creative economy, fledgling digital business models, and advertising revenues that support delivery of online creative content. We have had excellent engagement with the new Justice Minister, Helen Grant MP, and with Culture Minister Ed Vaizey MP, and we are hopeful that the British Government’s negotiations in Brussels can improve the proposed Regulation. However, the UK has a real challenge in negotiations with other Member States, and in the European Parliament, where the lead MEP on this issue strongly supports the direction being taken by the European Commission. This is a crucial issue for the UK advertising industry and it would be very helpful if the Committee could highlight the industry’s concerns as part of its current inquiry.

Advertising Association’s Position on the European Commission’s Data Protection Proposals The Advertising Association The Advertising Association (AA) is the only organisation that represents all sides of the advertising and promotion industry in the UK—advertisers, agencies and the media. In the UK, the advertising industry employs more than 250,000 people. In 2011, advertising expenditure was £16.1 billion. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Overview Online advertising spend will reach £5.3 billion in 2012. This money acts as a source of funding for online content and services. Consumers value the free access this allows them—for instance, lAB data shows that only 10% of internet users would pay to remove ads from the websites they currently use for free. Much of online advertising’s value stems from use of data, which allows advertisers to show ads that are interesting to web users. Such emerging methods in turn reduce barriers to market entry for business and content providers of all sizes, allowing for the greatest mixture of content and services to be made available. Because of the progress in digital technology, we believe that updating the law on data protection is sensible. However, we do not think the proposed EU-wide Regulation in its current form is an effective way to do so. The current proposals do not strike a fair balance between the rights of the individual to ensure that their personal data is protected, the needs of businesses to engage with consumers, and the potential damage to online content and service providers. We are seriously concerned about the content of the draft Data Protection Regulation which we believe could significantly burden businesses and hinder growth in the advertising sector. We reject the European Commission’s premise that it will lead to a net saving for companies estimated at€2.3 billion and call on the Commission to provide a clearer evidence base that shows where these savings may come from. We believe that the Regulation as proposed could seriously stifle innovation and increase costs. We are confident in our belief that implementing the proposals in their current form may well outweigh the alleged potential savings to businesses. The Advertising Association believes that the European data protection legislative framework should remain high level, with the Commission focussing on inconsistencies of application and enforcement across the EU. The Commission’s attempts to legislate for the current digital age are likely to be out of date in five years’ time and we would encourage the Commission to focus on a principles-based legal regime that can evolve as technologies develop.

Analysis of the impact of the Regulation The definition of personal data (eg including some IP addresses & cookies as personal data) and consequences for profiling—In general, IP addresses and cookies are anonymous data and this new Regulation would unnecessarily personalise these data sets with severe consequences for responsible and useful profiling. The use of cookies and IP addresses is essential to the smooth running of the internet. It is also necessary for the delivery of targeted advertising that is relevant to a browser but that uses no personally identifiable data. The personalisation of these data sets and the introduction of a stricter consent requirement (see below) could corrode the Viability of entire business models, particularly online advertising intermediaries. Further, the impact on the consumer of having what is currently “anonymous” data, like cookie data, considered “personal” could undermine the way in which genuinely personal data is processed as businesses are forced to treat these data sets equally. It is also concerning that the Regulation appears to hollow out the concept of special or sensitive categories of personal data. The requirement for explicit and informed consent for data collection & processing—The inclusion of the word “explicit” would most likely lead to requirements for increased “opt-in” mechanisms for the collection of what are effectively anonymous data sets (eg cookies and IP addresses). Businesses will essentially be forced to personalise these data sets in order to obtain the explicit consent of users. This is both hugely burdensome for business and would severely undermine the consumer’s online and offline experiences. From a practical point of view, it would lead to multiple pop-ups online for cookies and severely affect the direct marketing industry with the likely impact being an increase in unaddressed mail. Taking the cookies issue specifically, industry is working hard to comply with the consent requirements set out in the ePrivacy Directive, and so amending the consent requirements in this Regulation would further increase burdens on already highly pressured businesses. The introduction of a “right to be forgotten”—The advertising industry, and particularly the direct marketing sector, is especially concerned about the proposed right to be forgotten, and specifically its impact on third party data list brokers. The Regulation would require companies that hold an individual’s data and pass them to third parties to not only have to delete their information, but also to ensure the third party deletes this information too. This is extremely burdensome for businesses. The current data protection laws already set out rules that provide people with information on the identity of the organisation processing their personal data, and the purposes of this. Articles 12 and 14 of the current Directive provide a right of access and a right of objection. Individuals can require their personal data to be erased, blocked, changed or deleted. There is certainly a need to provide greater information to people about these rights and for the industry to wherever possible enable people to exercise these rights. However, the introduction of the blunt instrument of a “right to be forgotten” is not a positive step forward and likely to be unfeasible given the impracticalities that would arise in reality. The bureaucratic and financial burden on businesses (especially SMEs who make up a large part of our sector) due to extra staff and possible sanctions—The advertising industry would be severely impacted by the bureaucracy and sanctions that are required in the Regulation. These burdens include: hiring a Data Protection cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Officer, addressing the fact that they could be liable to a fine of 2% of their annual turnover, and processing the increased amount of data now classified as “personal”. The Commission speaks of€2.3 billion savings for business. We do not know where the Commission obtained that number from and industry certainly disputes the idea that money will be saved—rather it will impose a lot of costs. The extension of powers to the Commission through “delegated” and “implementing acts”—The Commission has included many of these acts which enables it to toughen the Regulation without any proper industry consultation or check and balance of an orderly legislative process. This will lead to increased business uncertainty about the future shape of data protection law in Europe. Furthermore, the lack of proper consultation with industry and other EU institutions is extremely worrying and will continue to deepen the problematic issues around the democratic accountability of the Commission. December 2012

Written evidence submitted by Cultural Learning Alliance The Cultural Learning Alliance (CLA) is a collective voice working to ensure that at a time of social and economic stress all children and young people are able to have an active engagement with the creation and enjoyment of our arts and heritage. The Alliance includes a range of organisations working across the cultural and educational sectors, including non-departmental public bodies, philanthropists, umbrella organisations, cultural partners, education specialists and schools. It is supported by a wider membership of over 7,500 individuals and organisations. The Cultural Learning Alliance is chaired by Lord Puttnam. A Steering Group meets quarterly to oversee the work and direction of the Alliance, and an Advisory Panel offers expertise and strategic support to all aspects of the CLA activities. The CLA is run by Elizabeth Crump and Samantha Cairns.

1. Summary 1.1 The Cultural Learning Alliance works closely with the Creative Industry Council and their Skillset Skills Group. We have been working with colleagues to clarify and lobby for a number of school and education focussed interventions that we believe are critical to the development and growth of the Creative and Cultural Industries. 1.1.1 Art, technology and cultural learning in schools fuel creativity in the workplace and that fuels the economy. Creative employees generate ideas, innovation and enterprise. 1.1.2 It is essential that these subjects are included in compulsory education and qualifications. They demand discipline, rigour and resilience to study, and they deliver vital skills to employers, including improved levels of literacy and numeracy. 1.1.3 It is essential that we create employees with a mix of creative, technological and entrepreneurial capacities. Education must value and nurture these essential skills. School measurement and exam systems must reward their development. 1.2 We have five main requests of government and of the arms-lengths bodies that work with it: 1.2.1 We want the English Baccalaureate and proposed English Baccalaureate (EBacc) Certificates to include subjects that promote creative, cultural, technical and entrepreneurial interests and skills eg Art & Design, Design & Technology, Music, Drama, Media Studies, Film Studies. We do not subscribe to a hierarchical ordering of subjects. 1.2.2 We want to contribute formally to the curriculum framework for creative, cultural and technological subjects; we believe a light touch is needed, not an overly prescriptive one. We want Dance and Drama to be included within the PE and English Curricula respectively. 1.2.3 We want young people to be offered applied qualifications, that are rigorous and that we help to inform, to run alongside the proposed EBC’s & A-levels, with high quality careers advice for all students at Key Stages 3,4 & 5. 1.2.4 We want Computer Science to be offered on a par with Biology, Chemistry and Physics as a “fourth science” in the EBacc Science subject grouping. 1.2.5 We want schools to be accountable through OFSTED for the development of their pupils’ creative, cultural, entrepreneurial and technical skills. We are keen to help inform this process so that inspectors are better equipped to identify and promote good practice. 1.3 In addition to these requests we want to ensure that schools, FE colleges and universities are equipped with the right workforce to deliver the best teaching and learning to support our sectors. We believe that this teaching and learning should be delivered by appropriately qualified teachers and be supported by the wider creative and cultural sector. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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2. Arts and Cultural Subjects in the English Baccalaureate 2.1 The introduction of the English Baccalaureate: What we know 2.1.1 The English Baccalaureate (EBacc) is currently a performance measure for secondary schools. It is relevant to young people in key stage 4 (ages 14–16). 2.1.2 Schools are required to publish the number of students that get A-C grades across ﬁve subject areas at GCSE level. These are: English, Maths, Science, Modern Foreign Languages and Humanities (History and Geography). These are generally known as the ﬁve Pillars of the English Baccalaureate. 2.1.3 This publication of results acts a league table and has led schools to start prioritising these subjects over others and putting their resources and funds towards them. 2.1.4 A recent poll by Ipsos Mori shows that over the last year alone 27% of schools have cut courses as a direct result of the EBacc measure and the year before 45% of schools cut courses. Of the courses cut, Drama, Performing Arts, Art and Design and Design and Technology are the worst hit.

2.2 The introduction of new qualifications (provisionally named English Baccalaureate Certificates or EBCs) 2.2.1 The Secretary of State for Education, Michael Gove has announced his intention to replace GCSEs with a new type of qualification. These new qualifications will be first developed for the EBacc suite of subjects and will come into force around 2015. He claims they will be more rigorous than GCSEs, will be linear and will be mainly assessed through exams. Modular learning and coursework will not be included.

2.3 The government’s argument: 2.3.1 There has been a decline in the number students taking EBacc subjects over the past decade. The Department for Education feels that the new performance measure has halted that decline already. 2.3.2 Teaching and learning in the EBacc subjects should take up 80% of school time and there is plenty of time in the curriculum to include other subjects if schools, parents and students think that they are important. This has been conﬁrmed verbally by DfE ofﬁcials to the CLA, but does not appear yet in writing in DfE documentation. 2.3.3 If schools think the arts are important then they can choose to include them.

2.4 What we know 2.4.1 There is currently a year-on year decline in the number of children and young people taking arts and cultural subjects in schools. This will have a signiﬁcant impact on the skills, knowledge and understanding that young people bring to the workforce. 2.4.2 Even committed school leaders and teachers need incentives and supporting structures to enable them to create the most effective arts and cultural learning. 2.4.3 Arts and cultural subjects cannot be relegated to a small percentage of the 20% of time “left over” from the “important” subjects. 2.4.4 Every child must have access to the arts and culture to be given the best chance to succeed. The arts must make up a core element of everyone’s education. If we lose the arts from the curriculum then only those with independent means will be able to participate. We risk an unequal system where some children get no access to the arts at all. We feel that these children will be signiﬁcantly disadvantaged in pursuing careers as part of the creative and wider workforce 2.4.5 Business leaders and strategists agree with us—a recent report171 by the Confederation of British Industry calls for the arts and cultural subjects to be included in the English Baccalaureate. This is echoed across the Creative Industry Council Skillset Skills report and across Darren Henley’s Review of Cultural Education. 2.4.6 Arts and cultural learning is essential in schools and makes a real difference. Young people do better in English and Maths subjects if they study the arts and are more employable. They are also more likely to vote, to volunteer and to get a degree. There is a great deal of international evidence172 to prove this is the case.

2.5 What we suspect Many of the CLA members are from Specialist Higher Education Institutions and we have begun to hear anecdotal evidence from these colleagues that the number and calibre UK of students applying for cultural and creative disciplines is falling. These colleagues feel that this is directly due to the narrowing of curriculum opportunities and a lack of encouragement of British talent. The CLA is currently working to collect robust evidence of this trend and would be happy to share it with the committee once it has been collected. 171 www.cbi.org.uk/media-centre/press-releases/2011/09/urgent-action-needed-to-meet-creative-industries-skills-demand- %E2%80%93-cbi/ 172 www.culturallearningalliance.org.uk/page.aspx?p=93 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w136 Culture, Media and Sport Committee: Evidence

3. Arts in the Curriculum 3.1 The review of the National Curriculum 3.1.1 Our National Curriculum covers statutory learning in schools for young people aged 5–14 (or Key Stages 1–3). It is currently under review and some draft documents for the Primary Curriculum (05–11) have been published. 3.1.2 Art and Design, Design and Technology and Music have been named as subjects that will be included, but Drama has been stripped from the latest draft of the Primary English curriculum. The place of Dance is also in jeopardy. References to Film and Media also appear to be signiﬁcantly reduced across speciﬁcations.

4. Accountability through OFSTED 4.1 It is absolutely critical that excellent arts and cultural learning is delivered in every school and as such it must be incorporated into the accountability measures that all schools are judged by. 4.2 No Early Years setting, School, Youth Service, Academy or other educational setting should be judged beyond ‘requires improvement’ by Ofsted unless that school provides a broad and balanced curriculum which includes the arts and culture. 4.3 The CLA and our partners are happy to offer to with Ofsted to develop criteria for this assessment and to work to integrate cultural learning specialists and Specialist Subject Associations into the assessment process alongside inspectors. Suitable indicators will be local and bespoke to different communities and arts organisations, but examples of commitment could include the Arts Council’s existing Artsmark and Arts Award schemes.

5. The need for qualiﬁed Teachers in Schools 5.1 In 2011, the government cut the number of postgraduate certiﬁcate of education places for trainee teachers—with art and music among the subjects most hit, losing 220 and 180 places respectively. It is critical that this trend is reversed. 5.2 The Creative and Cultural Industries have a part to play in supporting schools to deliver the best possibly learning opportunities, but this must be done alongside specialist teachers in schools—the sector cannot and should not replace this provision. November 2012

Written evidence submitted by Birmingham City University 1. From a university with strong cultural and creative industry credentials: — Government innovation investment is science, technology, engineering, and mathematics (STEM) focused. — Funding moving away from culture and creativity to STEM? — Do we understand the innovation ecosystem?

Introduction 2. Birmingham City University annually educates over 6,000 students in the creative and cultural industries— more arts, media, music and performance graduates than any other institution outside London. It has the: — Birmingham Conservatoire. — Birmingham Institute of Art & Design. — Birmingham School of Acting. — Birmingham School of Media which is a Creative Skillset Academy. 3. The University supports students and graduates establish portfolio careers and establishing their own businesses. Collaborating with universities in the city and the region, it accesses additional ERDF funding streams to support student/graduate entrepreneurship.

Government Innovation policy 4. The Government’s Innovation and Research Strategy for Growth (December 2011) mentions the wide range of ways that businesses can innovate including design. The Department for Business, Innovation & Skills (BIS) drives the UK innovation agenda through the Technology Strategy Board (TSB) and the Research Councils UK as well as tax credits etc. through HM Treasury. However, public investment in research and innovation is primarily in STEM + Medicine related disciplines. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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5. There is some focus on challenge-led innovation to drive interdisciplinary collaboration to develop new business models, products and processes eg climate change, ageing population, etc. where creativity and design take on more importance, but there probably needs to be more. 6. Under the European Commission’s Horizons 2020 research and innovation programme there is a key strand addressing society’s challenges. 7. TSB funding tends to support R&D led sectors of the economy which by their nature are STEM related and dominated by a few large players that can influence supply chains. So far moves by TSB into the digital economy have tended to focus on the technology aspects and not the applications that make the technology useful. 8. Our experience of the TSB Knowledge Transfer Partnerships (KTPs) is that it seems more difficult to demonstrate “high quality” impact if the innovation is not technological. 9. Increasingly funding for TSB KTPs are through specific calls eg civil nuclear supply chain. 10. Is there an issue at the heart of Government in that the cultural and creative industries have been “ghettoed” within Department of Culture, Media and Sport (DCMS) away from where the action is in BIS? 11. Government and its agencies need to encourage businesses and therefore Local Enterprise Partnerships to understand the potential benefits of creative and design-related innovation approaches.

Funding Moving away from Culture and Creativity to STEM? 12. There has been tightening up of Arts Council funding and this may be having a knock-on impact on the cultural and creative economy. 13. In the last round of Higher Education Funding Council for England’s (HEFCE) Higher Education Innovation Fund (HEIF) which runs from August 2011 to July 2015 the funding formula favoured those universities that have more income from contract research, consultancy, hire of specialist facilities and equipment, non-credit bearing continuing professional development, intellectual property, regeneration development and TSB KTPs. The impact of this was that the research intensive Russell Group universities— which by deﬁnition means research intensive in STEM + medicine—gained more of the HEIF allocation and were more likely to be on the maximum funding of £2.8 million p.a. Some specialist arts based institutions got nothing as they did not meet the minimum external income threshold required for the HEIF allocation formula. Post-92 universities—many of which have art and design departments established in the mid-1800s make the UK more competitive globally (!)—do less of the STEM related subjects and got less than in the previous round. 14. Many universities have legitimately used HEIF to support their student/graduate entrepreneurship activity. However success in doing this currently will not feed through the next round of the HEIF allocation, although HEFCE seems to be interested in stimulating social enterprise in universities.

Do we Understand the Innovation Ecosystem? 15. Birmingham City University is currently engaged in an EC funded collaborative project with EU partners looking at best practice in how ideas from creative and cultural sectors spill over into other sectors. 16. Is the role of the Arts Council, the BBC and universities with creative disciplines understood in the innovation ecosystem both regionally and nationally? 17. Regions outside London need to harness the potential of the creative industries. Fundamentally, we have a concern that the Creative Industries are in danger of being corralled into a ‘constructed’ creative sector which has a lower funding priority than other sectors of the economy. However, art, design and industry, particularly manufacturing industry, work hand in glove to produce new products of style and substance and create prosperity. The Creative Industries rather feed the economy rather than borrow or deﬂect resources from it. The recent Heseltine Report emphasises the need for vibrant and economically ambitious regions. Great cities have a thriving creative sector to make life better for their people and attract inbound investment. A thriving creative scene is consequently as vital to the nations, regions and their cities as it is to the capital itself. What holds good for the life and prosperity of London holds equally good for the regional hinterland, possibly more so. To perpetuate an artiﬁcial distinction between art and industry is to misunderstand the roots of British innovation and prosperity in the 19th century and, consequently, to underestimate the importance of its potential dynamic to the 21st century. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w138 Culture, Media and Sport Committee: Evidence

Written evidence submitted by Entertainment Retailers Association (ERA) ERA represents every sector of the UK entertainment retailing market, a sector which generated sales of £4,794 million in 2011. Members include specialists (such as HMV and Game), supermarkets (Tesco, Sainsburys), internet retailers (Amazon, play.com), independents (Rough Trade, Spillers, Resident) as well as digital service providers (Google, Spotify, Deezer, 7digital), covering the entire music, video and games markets. ERA members provide the video and music sales data which powers the Ofﬁcial UK Charts and the games data compiled by GfK Chart-Track.

Summary — The debate around the digital economy is polarised between copyright owners and technology providers; — Retailers take a different view reflecting their position as intermediaries between copyright owners and the public; — Whatever can be said about the UK Government’s response to the challenge of the internet, it has certainly been slow; — It took 10 years from the creation of Napster—the first mass channel for unauthorised file-sharing— and the first UK legislative response to internet piracy, the Digital Economy Act (DEA); — It is now more than two years since the passage into law of the DEA and yet effectively nothing has yet happened to clamp down on digital piracy; — Part of the reason for that is the polarised nature of the debate; — The net result however has been the continued “collateral damage” suffered by the retail sector due to piracy with hundreds of store closures and thousands of jobs lost; — ERA calls on the committee to urge government to give greater priority to the problem of internet piracy, by fast-tracking the measures included in the Digital Economy Act and reviewing how Government deals in future with fast-paced technological change. ERA’s particular interest in the current consultation is focused on the following issue: The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament). We believe that the debate around the Digital Economy Act became overly polarised between the views of copyright owners on the one hand and technology providers on the other. One danger of this is that the consumer interest sometimes gets forgotten. Because retailers by definition are in direct contact both with consumers and with copyright owners, they tend to take a slightly different view. One example is the issue of private copying—for instance format-shifting music from a CD to an MP3 player—where retailers have long argued that there should be a specific copyright exception. The view of some content owners that an exception is unnecessary since no consumer has ever faced action for format-shifting we believe is misguided, since maintaining anachronistic rules risks bringing copyright laws in general into disrepute. The view of some other copyright owners that private copying should only be allowed in return for a Continental-style levy (the so-called “iPod tax”) we believe is unrealistic and unfair to consumers. We believe clear lines need to be drawn which allow consumers to know exactly what they can and cannot do with the content they buy or subscribe to. The retail view is a pragmatic view.

Internet Piracy We believe internet piracy has been the biggest single avoidable factor in the decline of retail sales of entertainment, particularly music, over the past decade. Over that period the value of the combined music, video and games market has gone from a high point of £5,700 million in 2004 to £4,794 million in 2011. Music sales have gone from £2,111 million in 2001 to £1,066 million last year. Other factors have clearly been in play—such as the unbundling of albums (the ability to buy one or two tracks as downloads, rather than a whole album). But it remains true that piracy—estimated to account for anywhere between 20% and 50% of the total decline—has been the biggest single avoidable source of that decline. Sadly Government has not proven itself equal to the task. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The Digital Economy Act

We believe the Digital Economy Act is at best an inadequate response to internet piracy. In the ﬁrst instance it offers no more than the facility for copyright owners to write letters to infringers.

But inadequate or not, what is most striking is how slow has been the UK Government’s response to the challenge of internet piracy.

The US-based ﬁle-sharing—or, more accurately, internet piracy—network Napster began operations in June 1999. It was the ﬁrst mass market internet piracy network.

Yet the Digital Economy Act, the UK Government’s ﬁrst and so far only response to the challenge of digital piracy, did not receive Royal Assent until June 2010, more than a decade later.

Further, the letter-writing programme envisaged by the DEA has still not been actioned more than two years after that.

A key reason for that, we believe, is the overly-polarised nature of the debate. Current arguments over who should pay for the administration of the letter-writing programme merely play into the hands of those who now see it as their right to enjoy entertainment for free.

Collateral Damage

Over the decade the entertainment retailing sector has been devastated by falling sales, much accounted for by piracy.

Over that period we have lost: — Musiczone. — Fopp. — Virgin Megastores/Zavvi. — Woolworths. — And literally hundreds of independents.

Many once-signiﬁcant entertainment retailers such as Boots and WH Smith have withdrawn from the market, in part because piracy has made it unviable.

It is important to note that the victims of this situation have not only been physical retailers.

The UK is lucky to have a relatively vibrant digital entertainment retailing sector, but it is clearly difﬁcult for any business to thrive selling music downloads at 99 pence per song when the same material is available for free at the click of a computer mouse.

How much more vibrant would the UK digital entertainment sector be today if Government had taken more timely and more effective action?

Our Message to the Select Committee

ERA calls on the DCMS Select Committee to draw Government’s attention to the inadequacy of its response to the threat of internet piracy.

A gap of more than a dozen years since the creation of Napster with no effective UK Government response to piracy which is still damaging British businesses and British jobs on a daily basis is simply unacceptable.

We ask the Committee to remind both content and technology companies that their approach to the debate can be self-defeating, and is currently only beneﬁting lawbreakers.

We urge the Committee to demand that the current measures in the DEA are fast-tracked.

Finally, we ask the committee to consider how Government can ensure that its response to future technological change is both more timely and more effective. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w140 Culture, Media and Sport Committee: Evidence

Written evidence submitted by RadioCentre 1. RadioCentre is the industry body for UK commercial radio. Our role is to help support a strong and successful commercial radio industry, so that the sector grows revenues and audiences year-on-year. Within this, we help promote the public value and diversity of commercial radio. 2. Founded in 2006 after the merger of the Radio Advertising Bureau (RAB) and the Commercial Radio Companies Association (CRCA), RadioCentre represents radio groups and stations from rural, small scale ventures, to household names serving major metropolitan areas. Its member shareholders together represent over 98% of commercial radio listening. 3. Working with a range of stakeholders, RadioCentre works for the greater beneﬁt of commercial radio, from lobbying on the industry’s behalf with government, Ofcom and policy makers, to raising the proﬁle of commercial radio with advertisers and their agencies, and of course, working with radio stations themselves, helping them maximise the potential of their businesses.

Overview 4. RadioCentre welcomes the Culture, Media and Sport Select Committee inquiry into the creative economy. Commercial radio is widely respected as a significant part of the creative industries sector. It produces a range of immensely popular and diverse broadcast content; is a key partner of the UK’s music industry; and employs thousands of staff across the country, including hundreds of broadcast journalists. 5. It is 40 years since parliament paved the way for the first commercial radio stations with the passage of the Sound Broadcasting Act 1972. In that time these radio stations have provided 40 years of public value and entertainment for millions of people, and have become a much loved part of British daily life. 6. Today it remains true to say that Britain Loves Radio, with 9 out of 10 adults tuning in for an average of 22 hours each week. Commercial radio now comprises 300 licensed stations, which provide a vast array of national and local output to a total audience of over 33 million listeners across the UK each week. It is the market leader at a local level with a 79% share of local listening hours (against BBC Local Radio). And while commercial radio’s total share of listening is just over 43% (against the BBC’s 54%), it achieves this in a very efficient way through using just over 40% of the FM spectrum, compared to the BBC’s 60%. 7. We are particularly pleased that the Select Committee recognises the importance of growth amongst the creative industries such as radio, and the fact that it is looking at ways to build on the successes of a wonderful summer for British culture. Radio played a big part of the success this summer. It kept millions in touch with events in the Olympic Park, worked as an official partners on some of the biggest events of the summer, covered the Olympic Torch relay, the Queen’s Jubilee and provided a platform for people from across the country to listen and debate the events, as well as simply stay in touch with the latest news and information. 8. The ability of radio to provide live, mobile and up to the minute access to news, information and entertainment, which is free at the point of use, goes some way to explain its continuing popularity amongst listeners. 9. However, commercial radio continues to face a tough economic climate. Ultimately this a medium funded solely by advertising, and in recent years it has faced a perfect storm of cyclical short-term decline (in the face of a double-dip recession) alongside serious long-term pressures (due to the rapid growth in online advertising and competitive intensity). At the same time Government interventions are also putting pressure on our business model, due to the pressure from mainstream BBC radio services, the growth of community radio, the expansion of local TV and the rollout of broadband. 10. In response to these challenges—and in order to help restore growth to this part of the creative sector and related industries—RadioCentre is seeking support from Government for the removal of some outdated regulatory practices that we believe are barriers to growth. Specifically, as part of the Communications Review, we have asked Government to support commercial radio broadcasters by supporting the following principles (further details below). — Secure foundations—by providing platform certainty for stations (whether digital or analogue) and simpler licensing arrangements. — Maximising growth potential—by providing content freedom on localness and formats. — Protecting public value—by regulating local output, rather than measuring inputs (like quotas or local studio time).

Public Value of Commercial Radio 11. The growth in popularity and scale of commercial radio over the past 40 years has enabled it to emerge from its origins in pirate radio of the late 1960s and a smaller number of tightly deﬁned (legal) services in its early days, to become an established and highly valued part of the UK’s creative industries. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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12. The core output of commercial radio is still the range of entertainment, music and local information. The value of this content should not be underestimated. Indeed recent research173 found that radio can play a positive role in people’s lives, making them feel happier and more energetic, in a way that exceeds other media including TV and online. 13. However, commercial stations also provide a valuable and tangible function for audiences and communities, by producing local content and contributing to the plurality that is fundamental to our democracy. Information collected from RadioCentre member stations demonstrates the scale and impact of this contribution.174 Overall commercial stations broadcast an average of around 8½ hours of public service content each week. We estimate that, at current rates, the value of this public service activity is equivalent to more than £2.5 million per week across the whole commercial radio industry—or around £130 million in total per annum. — Local charity initiatives—Commercial radio broadcasts support for charity and community groups for an average of 13 minutes each week. This is in addition to the charity work done directly by radio groups. To take just a few examples, in 2011 Bauer Radio’s Cash for Kids initiative alone raised over £9 million, whereas one-off events such as the Free Radio walkathon in Birmingham successfully mobilised 10,000 people and raised over £420,000. Charity events, big and small, continue to be an important part of the commercial radio schedules and are a crucial part of the sector’s role in the community. — Local news provision—The average commercial station broadcasts more than 300 minutes of news each week (including 180 minutes of local news and 120 minutes of national news), across 19 bulletins a day. This output requires investment of around £27 million and the employment of hundreds of broadcast journalists.175 — Supporting local economies—Commercial stations also play an important economic role both as a local employer (whether directly, freelance or in a voluntary capacity) and as an affordable source of advertising for local businesses. Radio is an extremely efficient and cost effective advertising, both for small and medium sized enterprises so critical for our economic growth, as well as large national advertisers and brands seeking scale and profile across larger areas. — Providing a platform for new talent—Commercial radio performs a crucial role in discovering and nurturing new talent in both broadcasting and journalism. As well as being a valuable and widely distributed employer in the creative industries, commercial stations provide a fantastic environment in which broadcasting talent can be trained and developed. — Building and promoting music—Commercial radio is a key driver of economic growth of other creative industries, particularly the music industry. It is estimated that the UK music industry is worth around £3.8 billion176 and despite the availability of new services to purchase and access content, radio remains the most powerful promotional tool for music. It is essential to each stage of a musician’s career, from building an initial following, to establishing mass market interest, promoting successful artists and playing back catalogue. The role of radio is understood and appreciated by the music industry, which is only too aware of radio’s impact on consumers. This was confirmed in a recent RadioCentre survey,177 which found: — 64% of people say that radio is the most important source for to find out about new music (twice as important as any other source). — 36% of consumers report radio as the most important influence on their recorded music purchases (compared to 16% for TV and 12% for internet). — On average radio listeners spend 36% more on music than non-radio listeners.

Industry Context Radio listening 14. As noted above, despite the multitude of alternative media and entertainment services now available to consumers, radio listening remains remarkably robust (still reaching around 90% of the population in total each week). 15. However, the amount of time people are listening is reducing. A proliferation of media and services has created a scarcity of attention and growing competition for ears. This has become even more pronounced with younger listeners, whose habits are more shaped by these technological changes, and who are now able to listen to music and entertainment content in so many other ways. Consequently, among 15–24s, over the past 10 years, the time spent listening has fallen by 22%. In 2001. For example, 15–24s listened to 21.8 hours of radio in the average week, in 2011 this stood at an average of 17 hours. 173 Radio Advertising Bureau, “Media and the Mood of the Nation”, June 2011 174 All ﬁgures are direct from RadioCentre members, or collated as part of “Actions Stations: The Output and Impact of Commercial Radio” 2011 unless otherwise stated 175 Mediatique report for Ofcom, “The Provision of News in the UK”, June 2012 176 PRS for Music, “Adding up the Music Industry”, August 2011 177 RadioCentre/Communications Chambers consumer research, May 2011 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

Ev w142 Culture, Media and Sport Committee: Evidence

16. The way people listen to radio is also changing. Digital listening has increased by 11 percentage points over four years and now accounts for 31.5% of listening in Q2 2012. Listening through a DAB set accounted for the largest component of digital listening, 20% of total hours, while digital TV accounted for 4.7% and online/apps now accounts for 4.6% (up 37% year on year).

Radio revenues 17. The last two years have seen small increases in commercial radio revenues—with gross revenue up to £533 million in 2011 (and predicted to rise again in 2012). This growth has been driven principally by national advertisers, on the back of relatively strong listening ﬁgures, investment in radio brands and more effective and a compelling advertising proposition overall. 18. While these have been fairly modest increases, they are pretty remarkable against the backdrop of a double-dip recession and a substantial reduction in COI (government) advertising spend, which went from being the single largest spender on radio ads with £31.1 million in 2009 to only £10.9 million in 2011. 19. However, while these short term improvements in revenues have been welcome, they also mask a long- term decline in real terms for most of the past decade (with revenues down 32% in real terms since 2004—as outlined in Figure 1, below).

Figure 1 UK COMMERCIAL RADIO ADVERTISING REVENUES, 2011 PRICES, £M178

CAGR: +11.5% CAGR: -5.2%

764 775 697 705 719 698 654 683 602 618 549 546 546 533 472 419 377 314 260 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2

20. This pressure on revenue is forecast to continue, due partly to cyclical reasons, as economic growth has slowed and subsequently moved into recession. It has also been a result of structural changes and more intense competitive pressures. Ironically this has been exacerbated by Government intervention and over-regulation (outlined below). 21. Clearly the most signiﬁcant economic trend, which has put pressure on revenues across all media, is the on-going transition of substantial ad-spend to the internet. Over the last decade, radio’s share of total UK advertising has fallen from 4.1% to 2.7%, while internet ad revenues have grown to 35%.

178 RAB (gross to include agency commission, but exclude production costs), rebased to 2011 prices using CPI cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Figure 2

SHARE OF ADVERTISING SPEND, RADIO VERSUS INTERNET, 1999–2011179

Competitive pressures

22. Alongside these broader economic trends, commercial radio has seen growing competitive pressure. During the 1990s and early 2000s this was driven largely by the rapid growth in the number of local commercial stations (rising from 126 in 1993, to 317 in 2008). As revenue growth stalled this put much greater pressure on individual stations, with revenue-per-station declining and ﬁxed costs rising. However, in recent years the competitive pressure has come from a combination of the growth on online music services, accompanied by a number of unhelpful public policy interventions summarised below.

23. Probably the most signiﬁcant intervention has been the expansion in the footprint of the BBC. The BBC’s share of total radio revenues had grown to 61% in 2011 (up from 52% in 2004). BBC spending power not only distorts the market for radio production and talent, it changes the expectations of the resources required to deliver high quality programming. This ﬁnancial intervention has run in parallel with an expansion in the mass market popular music services offered by the BBC, with Radio 1 attracting older listeners and Radio 2 attracting younger listeners, which has squeezed commercial radio’s heartland audience of 25–44.

24. The growth of community radio, which was launched following 2003 Communications Act, has also led to a rapid growth of small scale not-for-proﬁt radio stations aimed at particular communities of interest. Many of the 200+ licensed community stations have provided a valuable addition to the local broadcasting ecology, but they also bring added competition for existing radio operators—attracting local advertising and/or depressing local advertising rates.

25. A further intervention that is currently being rolled out across the country, which may also have an impact on local advertising markets, is Local TV. Ofcom has now announced the details of the 57 bidders for the 21 local licences that are due to be awarded. Indeed it has started to award 12 year licences and expects to see certain services on air before the end of 2013. While the impact of these services is also uncertain, there is no suggestion (even from the Government’s own advisors180) that this initiative will release a previously untapped market of local advertisers in a meaningful way. In fact it is much more likely to cannibalise existing local advertising revenue.

26. The internet also now represents signiﬁcant competition for attracting advertising revenue. This is particularly the case at the local level given its strength in replacing traditional local press and classiﬁed advertising. This trend is likely to continue in any event. However, the investment by the Government in high- speed broadband roll-out across the UK (while entirely appropriate from a public policy point of view) is another factor that could accelerate the loss in revenue share to traditional media. 179 Screen Digest, RadioCentre analysis 2012 180 www.culture.gov.uk/images/publications/Local-TV-Report-Dec10_FullReport.pdf cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Our Vision for Growth

27. RadioCentre welcomes the focus of the Committee on barriers to growth in the UK creative industries. In the case of radio, we believe that there are potentially a number of areas where it may be possible to make simple, yet radical, changes to the rules applying to the current framework that would help the sector to release its potential.

28. While there have been some signiﬁcant and positive changes in recent years, the sector continues to be regulated into an unnecessarily high cost base. Much of this is due to the continued regulation of radio stations “inputs” (how many hours are produced from a certain studio, music policy etc) rather than ‘outputs’ (how much news and information, or locally-relevant content listeners can hear).

29. In order for the radio industry to thrive in future it will need to provide a compelling content proposition for listeners and advertisers, while also tackling high ﬁxed costs. Our vision is therefore to work with Government to shape a framework for growth and investment that secures this for the future. In considering how this would manifest itself in practice, there are three broad principles that run throughout our thinking. — Securing foundations—Growth will not be possible without secure foundations for the industry. This means certainty and clarity on licensing to allow operators to invest. It also requires a robust broadcast platform, digital or analogue. — Maximising growth potential—Growing revenues is key to the industry’s ability to invest in content. Providing ﬂexibility on how content is produced and delivered, allows commercial radio to compete for audience and revenue. Scale, simplicity and clarity for national advertisers is critical for growth. — Protecting public value—Commercial radio’s role in producing public value output should be encouraged and promoted. Local production rules and format do not generate or protect this public value.

30. As a consequence RadioCentre has made the following recommendations to DCMS as part of its Communications Review, and would urge parliamentarians to support these proposals in order to help secure the viability of this popular and valuable medium. — On localness—Retain local content by regulating the output of local radio stations, and removing local production quotas. — On licensing—Simplify licensing of FM radio by granting licences to particular categories of station with no fixed term, in return for commitments on locally-relevant content, local news and information. — On formats—As part of a new approach to licensing, specific station formats should be removed. Stations should instead be required to comply with the conditions of their licence category, which should be pro-actively monitored and enforced. — On digital/local FM—The priority must be clarity and certainty for operators and listeners, by making a clear and early decision on whether to switchover and which stations would be required to switch. — Commercial freedom—Greater commercial freedom should be provided. Specifically, the requirements to include such detailed terms and conditions in radio ads should be removed, and further sponsorship opportunities considered (including around—but never within—news output and children’s programming).

Conclusion

31. We believe that the key priorities outlined above would help to remove some of the ongoing barriers to growth in radio, and help it to fulﬁl its potential as part of the UK’s creative economy. For commercial radio, the beneﬁt of making progress on these priorities is clear. Clarity and certainty on our future broadcast platform; simpler licensing arrangements; and content freedom on localness and formats.

32. The risks of taking such steps is also low, due to the extent of continuing public intervention on radio (through the BBC and community radio) and the fact that it is in the interests of commercial radio to continue to serve listeners and advertisers in future by providing the output that they value, just as they have done for the past 40 years. November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the Local Government Association Introduction The Local Government Association (LGA) is here to support, promote and improve local government. We will ﬁght local government’s corner and support local authorities through challenging times by focusing on our top two priorities: — representing and advocating for local government and making the case for greater devolution; and — helping local authorities tackle their challenges and take advantage of new opportunities to deliver better value for money services.

Summary Local councils have long recognised the potential of the creative economy to drive sustainable economic growth in their areas and the strong correlation between creative industries and a vibrant visitor economy. In this submission, we emphasise that: (1) the creative economy makes a vital contribution to economic growth and the majority of the sector operates at a very local level. (2) councils play a key leadership and direct support role in the creative economy as part of their overall drive to increase economic growth, and national policy and funding must recognise this. (3) developing a future workforce with the right skills is a key issue for the creative economy and key to tackling this is further devolution of skills policy to local councils and their partners so that local skills providers are more responsive to local employers’ needs.

1. The local economy and the role of “clusters” and “hubs” in facilitating innovation and growth in the creative sector There is a significant local and place dimension to the creative economy which means it is entirely right for clusters and hubs to form in a way that reflects the level at which the creative economy operates. The creative economy is made up of a smaller number of multi-nationals and multitude of small-scale, niche companies often based around the skills and talents of individual entrepreneurs. It is often highly clustered with sub- sectors strongly represented in particular areas, for example, computer gaming and animation in Gateshead. The size and shape of the creative economy will vary from place to place—some councils have creative industry strategies and have invested in business support for this sector and have active plans to help develop connectivity—for example the Leicester creative quarter and Lewisham’s digital hub. In addition, the 10 councils that make up the Partnership for Urban South Hampshire mapped the concentrations of creative industries and agreed a common framework for developing creative industries in South Hampshire. Universities have a key role to play—clusters sometimes develop around university courses. Brighton City Council has worked closely with Sussex and Brighton universities and Wired Sussex (an employer membership body) to develop specialist courses in e-learning design. The LGA is working with Universities UK to explore how the link between business, university and local government can be strengthened. The local offer in a particular place may be the crucial factor in bringing investment to the United Kingdom. The promotion and sustainability of a vibrant creative sector in increasingly competitive global markets means we need to not only get the national framework right, but also recognise the role of local councils who can offer support suited to local need. Local authorities are also using the creative economy to boost other parts of the local economy, such as the visitor economy. For example, Derbyshire County Council and other local authorities in the Peak District are in partnership with tourism bodies to boost the numbers of overseas and domestic visitors to the Peak District by linking the area to celebrations of the 200th anniversary of Pride and Prejudice and numerous television and film adaptations that have been filmed in the area.

2. Public bodies responsible for supporting the sector There is a signiﬁcant local role in supporting the creative industries. Not least because: — there is a signiﬁcant local dimension to the creative economy and local know-how, relationships and networks are critical to the creative economy; — local councils through their cultural services provide the foundation blocks of the creative economy, such as running libraries and museums, providing youth services for young people to express themselves and providing parts of the regulatory regime that protect the cultural economy; and — their wider role in providing services to communities and convening partnerships allows them to play a key convening role for the creative economy. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Collectively local authorities spend around £3 billion annually on cultural services providing direct support for museums, theatres and libraries, events and festivals and the provision and upkeep of open spaces. However, councils also play other key roles. — Planning powers—councils have an important role to play by exercising their planning powers to ensure that access to a range of cultural facilities is an integral part of wider regeneration and growth. For example, a framework and toolkit was created to ensure that the vision of sustainable communities in the Thames Gateway had culture at its core. — Capital investment—local authorities’ investment in new facilities, some of which are at the heart of plans for economic growth and regeneration. For example, Kent County Council put culture and the creative economy at the heart of its ambitious plans to regenerate Margate with the Turner Contemporary providing a world class gallery and community building. — Direct support—local authorities can provide direct support for creative workspaces. The London Borough of Lewisham’s priority is to develop the digital and media sector including a project to deliver new creative industry business activity in empty commercial spaces, creating new routes to market and enlivening the high street. — Convening local partners—local authorities can provide community leadership and bring together partners. Eastleigh Borough Council is working with local partners to convert a former Royal Mail sorting ofﬁce into affordable workspace for creative industries. — Strategic partnerships—local authorities can provide strategic alliances with education and training partners. Cornwall County Council works with the University College Falmouth (UCF) who play a vital role providing research and development, and innovation capacity to creative entrepreneurs. UCF provides the “sector with access to high-end equipment, ideas and expertise in design, digital media, visual arts and crafts with UCF also acting as a portal to other university research departments.”

3. The Creative Economy and Skills Skills is a key issue for creative industries and those that work in the sector are diverse and highly skilled. However, too often there is a mismatch between local provision and local labour market demand. Across England there is an oversupply of skills in some sectors and an undersupply in others. More than a quarter of employers in the creative and cultural sector have had difficulty in recruiting due to a lack of experience and skills in applicants. This situation is being driven by a skills system incentivising a “bums on seats” approach to further education, rather than a more strategic consideration of what skills are needed by the local employers critical to driving growth. It is also important to remember that the creative workforce is not just made up of people with creative occupations but people who support and promote them, so skills in IT, crafts and technologies are also very important. We need to find ways to make local skills providers more responsive to local employers’ needs now and in the future. Councils and Local Enterprise Partnerships (LEPs) can play an important role. More radically, local partners should have more scope to adjust the financial incentives (currently under the Department for Business, Innovation and Skills and the Skills Funding Agency control) to make the system more locally responsive. Local authorities have a long tradition of providing services to young people and despite funding challenges, are seeking to bring together partners to reconnect skills to jobs, creating clear progression routes into work and further learning for their young people. This is true for the creative economy as well and there are numerous examples of local authorities working with partners in the creative industry to help provide skills and training required. The Royal Opera House has moved its production park to Purfleet in Thurrock with the active support of the council. The major development is creating 250 jobs and 2,250 training opportunities for 16 to 19-year- olds and professionals seeking a recognised qualification in offstage and backstage technical skills. Sheffield City Council worked with The Sheffield College Enterprise Gateway to secure over 20 apprenticeships for young people in creative industries. In order to respond to the needs of often smaller employers in the creative industries sector, the apprentices work on a project by project basis for several employers. There are thousands of hard-working and passionate young people out there who are crying out for a job and a chance to prove their potential. The Creative Employment Programme will hopefully play a key role in linking them the many opportunities available in the arts sector which would otherwise pass them by. It is vital that national schemes translate to suit local needs. To help young people get the most from these new opportunities the National Skills Academy needs to work closely with the councils on the ground who have a greater understanding of the issues facing their communities and labour markets. November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by Next Gen Skills

As co-chairs of the Next Gen Skills campaign we write to the Committee with our observations on the need to support skills development and the talent pipeline from schools through to higher education and employment in the Creative Economy.

In July 2010 Rt. Hon. Ed Vaizey MP, Minister for Culture, Communications and the Creative Industries asked us to undertake a review of the skills needs of the UK’s Video Games and Video Special Effects industries. Though there are important differences between our industries, we recognised that many of the skills we draw on are similar. They combine both art and digital technology, and rely on highly specialist, yet ﬂexible workforce that can adapt to furious rates of technological change.

We quickly found that our concerns about skills shortages were shared across hi-tech creative and digital industries more generally. Armed with 20 recommendations, we launched the Next Gen Skills campaign,181 an alliance between the digital, creative and hi-tech industries and the UK’s leading skills and educational bodies to ensure the UK develops the computer programming skills it needs for our economy.

Information and Communications Technology (ICT) Reform and Computer Science

The UK faces serious challenges on this front, particularly with regard to the teaching of Computer Science and ICT at school. Until the recent reforms undertaken by the Department for Education (DfE), little or no Computer Science or programming was taught at GCSE. A poor curriculum and little or no career articulation meant that we were not offering students the opportunity to learn the principles behind the industries which are driving so much new growth. This has also manifested itself in the teaching profession: according to the Royal Society only two thirds of teachers are judged not to have sufﬁcient qualiﬁcations to teach even the outmoded ICT curriculum dis-applied in September 2012.

There consequences of this can be seen with the poor take-up of Computing at A-level. In 2011 only 3,517 out of the 782,779 (or 0.4%) qualiﬁcations entered at A-level were in Computing and—shockingly—less than 7% (241) of Computing A-level students were girls, the lowest of all STEM subjects.

Over the last year the campaign has made signiﬁcant progress due to engagement by the Departments for Education and Culture Media and Sport, both of which recognise the need to address this issue. The DfE’s consultation on ICT reform in January this year and subsequent work commissioned by the Department has developed a new draft Programme of Study for ICT which includes computer programming. Major examination bodies have developed or are developing new Computer Science GCSEs and qualiﬁcations—removing a major obstacle hindering progress. A strong case for the inclusion of Computer Science in the English Baccalaureate has been submitted by an expert group brought together by the British Computer Society and the Royal Academy of Engineering.

Suggested Areas for Committee Scrutiny

These are welcome steps. However, in order to address our talent pipeline problem, there is much work still to be done around creating rigorous courses. It is essential that we do not lose momentum here. — Inclusion of Computer Science on the English Baccalaureate—Together with Computing At School, the Royal Academy of Engineering, British Computer Society and others we have submitted a paper to the DfE on the case for inclusion of Computer Science on the English Baccalaureate as an additional science. We believe this will cement the status of the subject as a rigorous discipline and encourage school take-up. — Additional Teacher Training—There are currently around 18,000 ICT teachers teaching in the United Kingdom. Support for bursaries for 50 new teachers and a Network of Excellence to assist with Continuing Professional development announced by the DfE on 19 October will need to be enhanced by additional funding in order to scale reforms adequately across English regions in particular. 181 Next Gen Skills is a major new campaign formed from an alliance between the biggest names from the UK digital, creative and hi-tech industries and the UK’s leading skills and educational bodies to improve the computer programming skills needed for the future growth of our economy. The campaign is funded and led by games and interactive entertainment trade body Ukie (including major international companies with UK interests such as Microsoft, Sony, Nintendo, EA, Activision and SEGA, plus leading UK creative development studios such as Blitz Games Studios, PlayGen and The Creative Assembly). Other supporters include Google, TalkTalk, Facebook, the British Screen Advisory Council, Guardian Media Group, the Design Council, Intellect, IPA, British Computer Society, Abertay University, Skillset, GuildHE, E Skills, the Education Foundation, NESTA and UK Screen (representing some of the world’s leading visual effects businesses, including Oscar winners Double Negative and Framestore). cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— “STEAM” (Science, Technology, Engineering, Art and Maths) not just “STEM” subjects— Google Chairman Eric Schmidt critiqued British education in August 2011: “Over the past century, the UK has stopped nurturing its polymaths. You need to bring art and science back together.” As the NESTA-Next Gen Report shows, the creative economy needs creative employees—labour market entrants who are not just skilled in Computer Science, but also Art and other creative subjects. There is continuing uncertainty over the status of Art in the new curriculum and the indications are that inclusion in the English Baccalaureate has been rebuffed. We ﬁrmly believe that the status of the subject as an essential discipline in the education system needs to be deﬁned at Key Stage 4 and 5. We attach a copy of the Next Gen report for the Committee’s further information,182 and would be happy to develop our points and experience further. November 2012

Written evidence submitted by Stop43 Executive Summary This submission consists of: — Stop43’s general position statement; — Elaboration of three recommendations made in the All Party Intellectual Property Group’s recent report; — Consideration of the inherent problems of the Enterprise and Regulatory Reform Bill’s copyright provisions.

About Stop43 Stop43 is composed of members of The Association of Photographers,183 The British Institute of Professional Photography,184 The British Press Photographers’ Association,185 Copyright Action,186 EPUK,187 The National Union of Journalists188 and Pro-Imaging;189 professionals who were sufficiently concerned and motivated by the threat that Digital Economy Bill Clause 43190 posed to our livelihoods that we took direct action.191 We had the support of the 16,000 members of the 10 organisations listed on our website,192 and that of thousands of photographers, as proven by their direct lobbying action that resulted in Clause 43 being removed from the Digital Economy Bill. 1. The overwhelming majority of commercial creators agree with and wish to retain their moral and property rights granted to them by copyright law. 2. With the Enterprise and Regulatory Reform Bill copyright clauses the executive intends to award itself the power to constrain, diminish and confiscate the human rights and property rights of UK and foreign citizens and relegate the detailed implementation of this power to secondary legislation. Moreover it intends to do this on the basis of inaccurate, incomplete and misleading Impact Assessments193 which the Intellectual Property Office has left unamended.194 This is of serious democratic and constitutional concern. 3. It is highly questionable whether the Government’s intentions and proposals comply with its obligations under international law and binding treaties. It is also highly questionable whether overall economic growth will result from this legislation, its ostensible purpose, for a very obvious and predictable outcome will be damage to the copyright industries themselves. 182 Not printed. Available at www.nesta.org.uk/library/documents/NextGenv32.pdf 183 http://home.the-aop.org/ 184 www.bipp.com/ 185 www.thebppa.com/ 186 http://copyrightaction.com/node 187 www.epuk.org/ 188 www.nuj.org.uk/ 189 www.pro-imaging.org/ 190 www.publications.parliament.uk/pa/cm200910/cmbills/089/10089.49–55.html#j901 191 www.stop43.org.uk/pages/pages/read_more.html 192 www.stop43.org.uk/pages/pages/about.html 193 www.allianceagainstiptheft.co.uk/downloads/consultations/current/ Oxford%20Economics%20Consultation%20on%20Copyright.pdf 194 “With regard to our conversation about moral rights, we may have said that moral rights are regarded by some as separate to economic rights but that does not mean that they do not have an economic value. Of course, legally, one cannot assign one’s moral rights to another, so in that sense you cannot sell them. As I said, many stakeholders told us that they would not even be willing to waive their moral rights at any price. In relation to the impact assessments for the implementation of an orphan works scheme and for the implementation of ECL, the economists may be able to acknowledge in future iterations the ways in which value can be attached to moral right.”—IPO staff to the author of this submission, by email cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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4. We believe that market-based licensing solutions to the problem of ‘orphaned’ works and the difﬁculty of licensing works are preferable to the wholesale erosion of the public’s human rights, moral rights, property rights and economic rights, and should be implemented and properly trialled before these rights are restricted, undermined, and damaged. 5. Stop43 would like to draw the Committee’s attention to our submission to your previous Inquiry into Intellectual Property rights. Our overall stance has changed little since that submission to you. 6. We would also like to draw the Committee’s attention to our submission to the BIS Select Committee Inquiry into the Hargreaves Review of Intellectual Property and the Government’s Implementation of its Recommendations,195 in which we make clear what we consider to be the conﬂicts with EU law and international treaty obligations of the IPO’s current proposals for orphan works, Extended Collective Licensing schemes, and expanded exceptions to copyright. 7. We agree with the conclusions and endorse the recommendations made in the recent All Party Intellectual Property Group Inquiry into the role of government in protecting and promoting Intellectual Property.196 8. In particular, we support strongly these three recommendations: — The IPO should revert to seeing IP as a property right; — The Government should be as concerned to promote the creation of new IP, as how existing IP is accessed; — The IPO’s oversight of copyright policy should be moved to DCMS.

The IPO should Revert to seeing IP as a Property Right 9. We note and agree with this passage from the APIPG Report: “We were also concerned that officials from the IPO find it difficult to describe intellectual property as a property right. It was described as a framework by one official which immediately undermines it. If the IPO sees IP as a framework then it suggests they see it as something that can be shaped and altered at will. We question whether such a laissez fair attitude would be taken to other property rights and if they were, whether senior Officials and Ministers would allow such an attitude to pervade. We think that because intellectual property is often a specialised subject, the IPO has been allowed freer rein by senior officials and Ministers within BIS, who would otherwise have taken greater interest. We believe this must change, and the development of policy by the IPO must be given far greater scrutiny by officials within the Department.”197 10. The Report also says: “When the officials from the IPO gave evidence, they were very clear that they saw their role as providing balance—they see this balance as ensuring consumers can have access to content.”198 11. The Berne Convention199 establishes beyond doubt that copyright is a property right. Article 2(6) states: “The works mentioned in this Article shall enjoy protection in all countries of the Union. This protection shall operate for the benefit of the author and his successors in title.” 12. That is the definition of a property right, not a “framework”, and has nothing to do with “balance”. 13. Article 5 states: “(1) Authors shall enjoy, in respect of works for which they are protected under this Convention, in countries of the Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this Convention. (2) The enjoyment and the exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work.” 14. Article 9(1) states: “Authors of literary and artistic works protected by this Convention shall have the exclusive right of authorizing the reproduction of these works, in any manner or form.” 15. The beauty of these provisions is that ownership of copyright is conferred on the creator automatically and without formality. The result is legal certainty, with no attendant costly, unwieldy and bureaucratic registration process. Ownership of copyright is simple, certain, and cost-free. 16. Exceptions to this right beyond those strictly necessary to ensure freedom of speech and democratic government almost invariably generate legal uncertainty, legal costs, and complex economic externalities.

The Government should be as Concerned to Promote the Creation of New IP, as how Existing IP is Accessed 17. Recent reports and recommendations, and legislation currently before Parliament, are concerned almost entirely with “easing access” by consumers and “users” to pre-existing copyright materials on the assumption 195 www.publications.parliament.uk/pa/cm201213/cmselect/cmbis/367/367we11.htm 196 www.allpartyipgroup.org.uk/pdfs/The%20role%20of%20Government%20in%20promoting%20and%20protecting%20IP.pdf 197 IBID, page 5 198 IBID, page 5 199 www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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that this will result in economic growth. In order to “ease access”, creators rights and with them incentives to create new materials, are to be weakened. 18. According to Oxford Economics200 the results, rather than creating growth, are likely to include: — a banal transfer of value from creators to consumers and “users” rather than growth; — a chilling effect on new professional creation; and — and increased risk for investors in the creative sector, many of whom are the creators themselves in the form of their careers and livelihoods. 19. Many of the “users” pressing for these changes are large foreign-based corporations or their partners and protégés in the Cultural Heritage, Academic, and NGO/lobbying sectors. A number of these corporations have recently been revealed as systematic exploiters of ownership and revenue transfer schemes which minimise or remove their exposure to UK Corporation Tax.201 Therefore, an additional significant result of the proposed changes to UK copyright law will be an outflow of value from the UK economy. 20. In contrast, China202 and Germany203 are strengthening their copyright laws. 21. Calls in submissions by creators to recent inquiries including the Hargreaves Review and the Copyright Consultation for the repair of defects in UK copyright law harmful to them appear largely to have been ignored. The only request of any significance which has been granted is for the Small Claims track in the Patents County Court, which has recently entered effect. 22. Professional creators make their copyright works in order to monetise them. We can only do that if consumers and other “users” have access to them, and it is in our interests to provide such access. We don’t need copyright law to “strike a balance”, and there is not one to be struck: copyright is a property right. 23. Rather, we need accessible, easy to use, functioning markets in which to offer our property, with a proper expectation of being paid, and effective, proportionate and dissuasive remedies if we are not. 24. “...the role of government begins and ends with protecting the rights of creators, rather than protecting any company or interest group’s business model. Once workable rules are established, the forces of supply and demand will determine the size and scope of any market.”—Helen Burrows and Kitty Ussher, Risky Business, page 90204 25. It is a property owner’s right not to place his property into a market. It is also that owner’s right to protect his property from devaluation and not to sell or licence it for less than he thinks it to be worth. A properly functioning market will soon adjudge what is sellable and what is not, and at what market rate. 26. We are in favour of easing access to normal primary licences for our works, and secondary licenses for those uses for which primary licences are impractical. We note that digital developments increase the practical scope of primary licences, even for small-value transactions, and tend to reduce the scope of secondary collective licensing. 27. We note that the Copyright Hub, conceptually linked to Stop43’s “National Cultural Archive” proposal to Hargreaves’ Review, is under development. It promises considerably to ease access to existing copyright works, and by acting as a trading platform for creators, stimulate the production and monetisation of new works. This can be expected to generate economic growth.

The IPO’s Oversight of Copyright Policy should be Moved to DCMS 28. Patents protect inventions by granting their owners, on payment of a fee to the granting authority, a monopoly right to exploit them for a limited period. They are not automatically granted, because to qualify for patent protection the invention must be deemed “novel” and “not obvious”. Almost all patents are dispassionate business assets of one form or another. For this reason it is appropriate that patents policy should reside with BIS and patents be granted by its subsidiary the Patents Office, of which ‘Intellectual Property Office’ is a recently-acquired operating name. 29. In contrast, The European Court of Justice defines a copyright work as “the author’s own intellectual creation reflecting his personality”.205 It can be regarded as representing its creator. Copyright is therefore an amalgam of property rights and other rights, which include “moral rights”;206 and human rights.207 The right not to be “arbitrarily deprived of your property” is also a human right.208 200 www.allianceagainstiptheft.co.uk/downloads/consultations/current/ Oxford%20Economics%20Consultation%20on%20Copyright.pdf 201 www.bbc.co.uk/news/uk-politics-20211042 202 http://english.people.com.cn/90882/8002522.html 203 http://link.ft.com/r/P75VYY/HID8K2/RN9BF/NJ7NFO/Z80BJN/4O/h? 204 www.demos.co.uk/files/Risky_business_-_web.pdf?1320841913 205 http://curia.europa.eu/juris/celex.jsf?celex=62010CJ0145&lang1=en&type=NOT&ancre= 206 www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html#P123_20726 207 www.un.org/en/documents/udhr/index.shtml#a27 208 www.un.org/en/documents/udhr/index.shtml#a17 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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30. With the possible exception of databases, being “literary and artistic works protected by this Convention” most copyright artefacts are cultural objects or expressions, for many of which (perhaps the majority) the creator’s expression is of more importance and value to its creator than the artefact’s economic value. 31. For this reason it is fair, reasonable and sensible that responsibility for copyright policy should be vested in the Department of Culture, Media and Sport. The APIPG Report says: “...we believe that there is merit in joining together the policy oversight of the creative industries with copyright policy, given how closely interconnected those two are. If the two policy areas have single oversight, we believe that DCMS will be a better promoter of the importance of copyright to the success and future growth of the creative industries.”209

The Enterprise and Regulatory Reform Bill Copyright Clauses 32. These consist of clauses conferring powers by regulations to vary copyright exceptions; to alter the duration of copyright in certain unpublished or anonymous or pseudonymous works; and to introduce “orphan works” and Extended Collective Licensing (ECL) schemes. 33. In our view they are premature, ill thought-out, constitutionally improper and in breach of international obligations.

Premature and without proper consultation 34. There has been no consultation on clauses 65–67 and 69210—they are not designed to implement the Hargreaves Report;211 Clauses 67, 68 and 69 and Schedule 21 were added by the government at Committee stage in the First House; the proposals in clause 68 on “orphan” works go much further than is necessary to ensure the availability of cultural heritage whereas the EU Orphan Works Directive (2012–28/EU adopted 5 October 2012) strikes the right balance between the rights of copyright owners and the public; and the proposals in clause 68 for extended collective licensing (‘ECL’) are not compatible with the current proposal for an EU Directive (COM-2012–3722_en) on pan-European collective licensing drawn up following extensive consultation and which addresses the market requirement for pan-EU licences.

Ill thought-out 35. Initially, the explanation given for clause 66 was that it was needed to maintain the UK’s higher criminal penalties for copyright infringement if the exceptions to copyright were changed. This would only be relevant if the existing exceptions were to be narrowed (ie more acts would infringe copyright) and there are no proposals of which we are aware to do so. 36. Subsequently, clause 69 was introduced to deal with criminal penalties and clause 66 subjected to a badly- drafted and largely incomprehensible amendment. The current justiﬁcation offered for clause 66 is unclear: the IPO has said that it does not need it as it could introduce any provision it wished to under the provisions of s.2.2 of the European Communities Act 1972 (ECA). This is simply not an adequate justiﬁcation for a “Henry VIII” clause with potential for such wide-reaching damage to the British economy.

Constitutionally improper 37. Cause 66 gives the power to introduce new exceptions to copyright by secondary legislation. It may not be apparent to the ordinary parliamentarian that this means reducing the scope of copyright protection itself so that the value of copyright to those who earn a living from it will also be reduced. Clause 67 provides for copyright to be withdrawn from works written anonymously or under a pen-name. The conﬁscation of property rights of British citizens should not take place without a full public debate and parliamentary scrutiny.

Breach of International Obligations 38. Additionally, clauses 66–68 by removing property rights of UK citizens and foreigners may breach the UK’s obligations under the Berne Convention and TRIPS which is causing extensive concern internationally. These provide that changes to copyright may only be made if they meet the “three-step test”.212 The Bill may not be Human Rights Act 1998 compliant since it is questionable whether the deprivation of property rights protected under Article 1, Protocol 1 European Convention on Human Rights complies with the proportionality 209 IBID, page 6 210 Note that the Hargreaves Report only asked general questions and made general recommendations in relation to areas covered by clause 68 so its status as proper consultation on the specific implementation proposed in this clause is open to question. 211 Hansard 12 July 2012: cols.628–9: Norman Lamb (Minister of State BIS): “Clause 56 is not part of the wider Hargreaves work but arose as a specific consequence of our wanting to keep the strong penalties needed to remove exceptions. The shadow Minister talks about evidence-based policy making, proper consultation and proper consideration of the issues, which is precisely why the Government commissioned Hargreaves to undertake an independent review, during which he talked to many stakeholders representing a wide range of views. The Government will make announcements about the outcome of that review and their response to it in due course, but the review is a proper basis for making policy.” 212 Article 9.2 of the Berne Convention and Article 13 of TRIPS (with which the UK must comply as a condition of its membership of WTO) set out the “three-step test”. Article 5 of the Berne Convention extends copyright protection in the UK to the works of foreign creators which get the same protection as do the works of UK nationals. That test allows for national legislation to permit exceptions to copyright only: (i) in special cases (ii) provided that it does not conflict with a normal exploitation of the work; and (iii) does not unreasonably prejudice the legitimate interests of the creator. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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requirement. It is noteworthy that the Minister’s statement that the Bill is so compatible was only given at a very late stage of the progress of the Bill and was given by a very newly-appointed minister. November 2012

Written evidence submitted by CBI (Confederation of British Industry) 1. The CBI is the UK’s leading organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world. 2. The CBI welcomes the opportunity to provide evidence to the Culture, Media and Sport Select Committee for this important inquiry on the creative economy. The CBI has been actively championing the creative industries as an important part of the economy and business community since the launch of our blueprint for the creative industries in July 2010.213 This submission reflects on the progress made to support the sector since then and argues that: — The creative industries should continue to be a UK economic priority. — Despite natural strengths in many creative fields the UK’s creative industries still face significant challenges to economic growth. — Targeted Government support should focus on skills, innovation and incentives.

The Creative Industries Should Continue to be a UK Economic Priority 3. UK creative businesses, entrepreneurs and stars and volunteers played a vital role in the British success story of the Olympics and Paralympics this summer, helping to remind the world that the UK remains a global leader in all things creative. 4. As well as demonstrating world class talent and skills across a range of sub-sectors such as music, film, dance and architecture, the creative industries also continue to punch above their weight economically, employing over 1.5 million people in 106,700 businesses. And as a sector with high growth potential we believe the creative industries could play a significant role in rebalancing the UK economy as we emerge from the downturn. 5. The Olympics was also a critical opportunity for showcasing the export potential of the creative industries given the number of international stakeholders that were both in the UK to see the games and those watching Olympics content that was broadcast globally. In fact the creative industries are already successful exporters, accounting for nearly 11% of the UK’s service sector exports in 2009. The CBI believes they are also well- placed to exploit growing export opportunities in countries such as China, India, Brazil, and Turkey as these markets develop and their increasingly affluent populations seek to consume UK creative films, TV, music, and books. Such opportunities aren’t limited to the content-based sectors of the creative industries. Sectors such as advertising and architecture are equally strong and should also be championed.

Despite Natural Strengths in many Creative Fields, the UK’s Creative Industries still Face Significant Challenges to Economic Growth 6. The UK’s creative industries benefit from a number of natural strengths such as our long heritage of world-class architecture, music, publishing and film-making, and the English language provides a huge international market for our films, music, TV and books. Yet the creative industries still face a number of barriers to greater growth, which need to be understood in order to help creative firms compete internationally and fulfil their potential to grow. 7. The principal challenge facing the creative industries is the development of digital technologies which constantly change the way we consume creative content. Smart phones, which were only a pipe dream five years ago now make up nearly two-thirds of mobile phones used in Western Europe and North America and have a huge influence in how we access creative content. 8. Such changes present opportunities in terms of being able to distribute content much more rapidly to a more international audience via several different platforms. However, they also pose a significant challenge for business leaders who constantly have to redevelop their business models; online piracy has made this an even bigger challenge. In this context the succession of reviews of copyright policy in recent years, without a clear sense of direction, has led to a great deal of uncertainty for firms that rely so heavily on copyright for their business models. Ultimately firms need to be able to monetise their creative ideas and content so that they can reinvest in new creative material and employ the next generation of artists. 9. The fact that this sea change has hit the creative industries at the same time as one of the worst economic downturns in recent history has inevitably made it harder for creative firms to invest for the future, and more necessary for the firms to be able to scale up and reach international audiences and customers. 213 www.cbi.org.uk/media/943560/2010.07-cbi-blueprint-for-creative-industries.pdf cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Targeted Government Support should Focus on Skills, Innovation and Incentives 10. During a period of such economic turbulence and change for the creative industries we believe it is vital for the Government to make targeted interventions that will help UK creative firms compete internationally, attract global investors to the UK, and contribute to the private sector led recovery. 11. Our 2010 Blueprint highlighted six factors which would be critical to the success of the UK’s creative industries, which remain as relevant today: — Ensuring regulation and competition policy are fit for purpose. — Delivering skills to meet the many and varied roles in the creative industries. — Ensuring the ability to derive value from intellectual property. — Delivering a competitive tax framework. — Ensuring access to finance for creative companies. — Encouraging investment in infrastructure to support new business models. 12. The CBI recognises that the Government has placed more importance on the creative economy in the last two years, and the establishment of the Creative Industries Council is an indication of this support. In specific areas, too, the Government has shown its willingness to support creative sectors. — The continuation of the film tax credit and its proposed extension to TV drama, video games and animation, for example, should enable UK firms to compete more effectively with international competitors in France and Canada in particular. By levelling the playing field in tax terms the UK is better able to attract productions to the UK on the basis of quality. — The Government has also recognised that with rapidly changing digital technology the future success of the creative industries relies on school leavers being able to programme computers as well as use their applications. The current reform of the school ICT curriculum should go a long way to addressing this barrier. 13. The CBI’s most recent report, ‘Playing our strongest hand’214 focuses on the need for an industrial strategy to unlock growth in the UK economy, highlighting the creative industries as one of seven sectors where the UK already has a strength to champion for further and long-term growth. This report sets out an action plan to target support at the creative industries, focusing on skills, innovation and incentives. — Skills (a) Push ahead with reforms to school ICT and ensure sufficient teacher training courses are in place to successfully roll out the new curriculum and deliver digital skills, alongside art training, that the UK’s creative industries need. (b) Ensure the Employer Ownership pilot works for smaller companies, helping to widen the uptake of apprenticeships in craft skills required to underpin areas such as fashion and film. (c) Promote SME collaboration on skills, strengthening collaborative models such as the Apprenticeship Training Agencies (ATAs). — Innovation (a) Provide a certain and robust copyright regime so that those prepared to invest in creative content development can achieve sustainable returns and are best placed to tackle piracy; this includes avoiding extensive new copyright exceptions where licensing models are used successfully. (b) Deliver world-class digital infrastructure through which the UK’s creative industries can continue to produce high quality content, by ensuring broadband provision keeps up with international competition and that planning reforms make progress on the ground. (c) Make sure EU data protection proposals do not inhibit advertisers, maintaining the industry’s ability to innovate and invest in creative content, while providing effective privacy. — Incentives (a) Target access to finance for small firms that rely on intangible assets by working with the creative industries to tackle what can be perceived as a risky business. (b) Ensure introduction of corporation tax relief is internationally competitive with regimes offering similar relief, both in level of support and scope of activities. (c) Use competition policy appropriately by using up-to-date and flexible market definitions in this sector, reflecting the myriad routes to market and allowing the sector to respond quickly to new opportunities to grow. 14. The CBI would like to see the Creative Industries Council take a strong role in making this action plan happen. Only if all parts of Government and industry work together on this agenda will the UK’s creative 214 www.cbi.org.uk/campaigns/industrial-strategy/ cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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sectors be in a stronger position to compete internationally and turn their creative edge into competitive advantage. November 2012

Written evidence submitted by BT Introduction BT is pleased to respond to this inquiry. Our comments relate to issues primarily from the perspective of a provider of communications services whose activities impact the UK’s digital, including the ‘creative’, economy in a number of ways. Given BT’s ongoing development of broadband services and increasing their availability in the UK, its role in the Olympics and Paralympics, its role in developing skills to equip young people to take a full part in the digital economy and support for innovation, we hope the Committee will find our observations useful. Widespread availability of broadband continues to be one of the key drivers of growth, not only for established media and creative industries but also for newcomers: new entrants going into business for the first time and players from other industry sectors pursuing business opportunities created by ongoing changes in product/technology integration and consumer behaviour. Greater bandwidth provides them all with opportunities to develop new and exciting products and services, and allows them to distribute these quickly and to the widest possible audience. The creation of a fully-digital Britain in which every citizen has the opportunity and ability to enjoy the benefits of being online is one which sits at the heart of our business. Such an environment will support a vibrant UK economy, underpinning growth and employment while providing enhanced social benefits, as well as broader and more cost-effective access to services. Realising these benefits will require innovation and investment across the global communications and content industries.

Specific Questions in the Call for Evidence How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games? 1. The legacy of UK talent from London 2012 can be developed using assets developed in and around venues, which would not have materialised were it not for the Games. BT’s communications network, which links venues and areas around them, is a great example of this; it can be a fundamental contributor to the UK’s creative talent to demonstrate its skills. 2. A significant BT network developed around London 2012 venues; BT will leave the thousands of kilometres of cable that we put in the ground for the Games, providing a communications legacy for Stratford and other Games sites such as the sailing venue in Weymouth. The next-generation fibre network will be left in place at the Olympic Village for the benefit of local communities and businesses; just under 3000 apartments in the Village will have broadband speeds of up to 300Mbps. 3. In terms of network actually within the venues, we have been approached by a number of them to consider donating equipment as a further legacy contribution. We are considering these on a case-by-case basis. 4. We are also working with the London Legacy Development Corporation, negotiating legacy use of our mobile and WiFi networks both at the Olympic Park and at other venues.

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7. We also hope that changes being implemented through the Enterprise and Regulatory Reform Bill and proposed changes on copyright exceptions can bring far greater understanding and clarity than there is today for consumers and others. Improvements such as reducing confusion and ignorance on what is and is not infringing activity, could cultivate greater respect for and compliance with copyright law. This too would have a positive impact on the creative economy. 8. Reaching a situation where copyright holders, potential licensees and end-users are better equipped to innovate and utilise copyright works within the bounds of copyright law, updated to reflect the needs of a digital age, should complete a virtuous circle of productivity and fairness. 9. In relation to the Digital Economy Act (DEA), whilst some will feel frustration about the time taken to implement, it should be recognised there is an inevitability of delay when introducing controversial laws; France, Spain and New Zealand have all experienced this with similar legislation. However, developments from and alongside the Judicial Review have helped to clarify a number of the issues that troubled a number of stakeholders during the passage of the legislation. These issues were not satisfactorily addressed at the time because of the lack of pre-legislative scrutiny by Parliament and the Bill being rushed through under the pre- election “wash-up” process. 10. The increased certainty and clarity provided by these developments should be helpful in generating greater acceptance and respect for this law. It should contribute to the law being understood and applied fairly, and perceived to be so. This will also be aided by increasing growth and uptake of legitimate digital services in sectors such as films, music and publishing. 11. BT’s view, therefore, is that there has been no material adverse impact from the current failure to implement the Digital Economy Act in line with the timetable envisaged at the time the DEA was passed. 12. Indeed, in the intervening period, developments in EU and UK case law have clarified that in terms of enforcement, copyright owners are able to obtain injunctions against internet intermediaries such as internet access providers to restrict access to copyright infringing web-sites under existing law. Therefore it can be argued that the extremely controversial provisions in sections 17 and 18 the DEA were not needed. Section 97A of the Copyright Designs and Patent Act 1998 provides the necessary remedy in appropriate cases. The Government had already instigated a review of the feasibility of the web-blocking provisions of the DEA215 and in June this year announced that it would repeal those provisions.216 Copyright owners have already obtained injunctions against two sites through this route, more are expected. The process is becoming streamlined with the experience gained by all sides on the applications which have been made. 13. It has also been clarified by case law that the test of whether technical measures such as filtering and blocking are an appropriate remedy is fact-specific and requires balancing of the rights of all stakeholders who would be affected—copyright owners, “infringing” content providers and users and the impact on ISPs putting measures in place. It has been emphasised that remedies cannot be pursued on the basis that copyright owner’s rights in any way “trump” the rights of others, all need to be weighed to reach a fair and proportionate result.217 14. Clarification has also been provided on the allegations that can be properly made against people whose internet access services appear to have been involved in copyright infringing activities. This included the evidential proof limitations of IP address information obtained by copyright owners in the course of detection of P2P file-sharing activities which forms the basis of copyright infringement allegations against ISPs’ customers. 15. These issues and the Government’s statements during the Judicial Review have helped to clarify that the role of notifications sent under the Initial Obligation Code of the Digital Economy Act are to educate ISPs’ customers about copyright infringement potentially occurring on their internet access lines. Judgments in the Media C.A.T. cases218 and Goldeneye219 are providing guidance on the need for care in any notices sent to customers, eg on tone, accuracy of allegations made and the inferences that can be drawn from IP address data being matched to a customer’s internet account. They have also led to Ofcom’s original proposals in the draft Initial Obligations Code on accuracy and reliability of copyright owners’ evidence to ISPs being revised in ways which will increase the robustness of, and confidence in, the fairness of the DEA regime overall. 16. The Judicial Review challenge has been a source of delay to the original timetable but it was not possible to gain the clarity and certainty that BT considered it prudent to have until after the Act was passed. It would not have been to anyone’s benefit to rush into implementation only to find that fundamental elements of the legislation were unenforceable and, or unable to be progressed, for example: 215 Ofcom report on SS 17, 18, DEA http://stakeholders.ofcom.org.uk/binaries/internet/site-blocking.pdf 216 DCMS announcement June 2012 www.culture.gov.uk/news/media_releases/9160.aspx 217 Court of Justice of the EU decisions: 24 November 2011 in Scarlet Extended v Sabam Case C-70/10 http://curia.europa.eu/juris/ celex.jsf?celex=62010CJ0070&lang1=en&type=NOT&ancre= on the limits of obligations that can be placed on an internet access provider ( “mere conduit” providers) to prevent the unlawful use of protected works; 16 February 2012 Sabam v Netlog Case 360/10 http://curia.europa.eu/juris/document/ document.jsf?text=&docid=119512&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=157703 http://curia.europa.eu/juris/celex.jsf?celex=62010CJ0360&lang1=en&type=NOT&ancre= on the limits of obligations that can be place on the owner of an online social network (“hosting” providers) to prevent the unlawful use of copyright protected works 218 Patent Country Court judgment of Birss J on 1 December 2010 www.bailii.org/ew/cases/EWPCC/2010/17.html 219 High Court Judgment of Arnold J on 26 March 2012: www.bailii.org/ew/cases/EWHC/Ch/2012/723.html cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— because of a failure to notify the DEA to the EU for review under the Technical Standards Directive before it was adopted; — that it required general monitoring by ISPs within the meaning of the E-Commerce Directive which was prohibited; — to meet challenges under data protection law about the processing of IP address information by copyright owners and ISPs; and — what, if any costs of the system could lawfully be placed on ISPs. 17. The Judicial Review has provided some answers, enough for the Government to restart the clock on DEA implementation, but a great deal of uncertainty and inbuilt delay remains. The Initial Obligations Code has not been settled yet and will have to go through an EU review process before it can be adopted. Difﬁcult issues about sending notices to customers such as libraries, universities and businesses which are both “subscribers” as well as “internet access providers” within the meaning of the Act remain to be resolved. 18. ISPs cannot begin technical implementation because they do not have basic information on the level of infringements, a pre-requisite for system design and build. This normal starting point has been turned on its head by the way DEA is to be implemented. A prolonged period is involved during which ISPs have to estimate costs against different potential volumes, Ofcom has to review and agree the cost model, potential tariffs agreed between Ofcom and copyright owners, an iterative tariff agreement/bargaining period between Ofcom and copyright owners on what volumes at what costs they are prepared to agree, and so on until an agreed volume/cost tariff can be reached. 19. Meanwhile, the rules within the Government’s Cost Order Statutory instrument, currently before Parliament, are still the subject of concerned comment by consumer, citizen and taxpayer groups for seeking to introduce a £20 “appeal” fee, justiﬁed on the basis that this is the level of fee designed to deter too many appeals and so make the system “attractive” to copyright owners to use (as long as the ISPs’ costs are low enough too). 20. In terms of Ofcom’s activities, Ofcom cannot begin putting the Appeals Body envisaged by the DEA into place until further down the current process, and uncertainty remains for all stakeholders on the precise remit and procedures for appeals. Ofcom can do little to assist without encroaching on matters the Appeal Body itself will have to determine. Ofcom will also have to develop and specify what it wishes to put in place to establish an objective and reliable measure of the amount of P2P infringement occurring. This will enable it to assess what impact Initial Obligations Code measures have and help determine which ISPs should be subject to DEA obligations. In addition, in its draft Code consultation, Ofcom indicated some reviews it intends to consult on after six months, eg, running of the Code and any material changes, as well as factoring in the three to four month EU review process and any necessary legislative changes that follow. 21. Copyright rules and the consequences of infringement need to be explained in ways digital consumers can understand. Breach of copyright is entirely wrong but action against those who access or share music, movies and other material unlawfully needs to follow due process and be proportionate. The objectives of the DEA’s Initial Obligations Code are right in aiming to address assisting copyright owners providing cost recovery for the actions of ISPs, as well as fairness to customers. At this point it appears to be unlikely that the right balance can be achieved except through the DEA route with the checks and balances built in through regulation and oversight by Ofcom and an independent Appeals Body.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this? 22. BT is key to the creative industries and digital economy, which increasingly depend on the communications infrastructure that we continue to develop to match the needs of users. 23. A strong skills base is needed for the growth and development of the UK’s creative industries and digital economy as a whole. This is not confined to the creative economy in isolation. Although the Committee has indicated in its call for evidence that it wishes to focus on sectors such as film, music, television, design and games; the artistic, production and technical skills that these industries need to remain world-class will be developed in a much broader arena. 24. Our principal concern with regard to education is about ensuring that people have “all-round” skills, not just those required for specific jobs. We believe that the role further and higher education has in supporting the creative economy is to ensure that individuals who want to pursue careers in the creative industries are able to do so without losing perspective on how their industry fits into the wider world; as well as studying creative subjects, individuals must still be able to understand and articulate the impact of what they do or want to do means in business and society terms. 25. Crucially, individuals must retain a firm grip of maths and English, as well as ICT. This was also a recommendation of the recent Wolfe report. It shouldn’t be assumed that these should be ignored if individuals are good in creative areas. Instead, educational establishments should ensure that individuals understand how these relate to the work that they do. For example, there is little point in designing creative media if this can’t be adequately described and presented in a sales pitch. It’s no good wanting to run an exhibition if you can’t cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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balance the books in terms of costs and income and in an ever increasingly online world, you need ICT skills to communicate your message effectively.

BT’s Contribution 26. All kinds of activities that develop coding and software programming skills are available for the creative industries to draw on for their workforce. BT’s plays a significant part in this, with initiatives that also enhance the foundation skills of literacy and numeracy in school leavers and providing support and investments in apprenticeships and further and higher education. 27. BT recruits around 500 young people every year onto our apprenticeship programme. These young people undertake a range of roles including engineering, IT and customer service. Much of this training involves coding and software programming. Apprentices rotate their places of work, gaining experience in, for example, our TV activities. We also make a significant contribution to many skills projects, sponsor three academies and a university technical college and 1000 BT people act as school governors. 28. BT is working with e-skills UK and the National IT Partnership (NITP) to develop and launch a ‘gold standard’ IT apprenticeship for new recruits into SMEs. BT will provide the quality assurance and also significant other value-add activities such as employment/business skills, mentoring support, access to eLearning and membership to our apprenticeship network. 29. BT sponsored a Department for Business, Innovation and Skills report into simplification in the skills system in 2011. Work in 2012 includes a project with e-skills UK and the National Apprenticeship Service to support small companies in taking on and developing apprentices and working with the UK Commission for Employment and Skills on its “Employer Investment in Skills Project”. 30. With regard to literacy and numeracy, BT is running projects with schools including the “Communication Triathlon”, which helps children express themselves through improved speaking and listening skills; All Talk, a range of materials that support English GCSE and A-level English language; and we have sponsored STEM Challenges, a series of competitions designed to encourage young people aged 11–14 to use science, technology, engineering and maths (STEM) skills.

Written evidence submitted by the National Writers Union This letter with its attachments220 is submitted on behalf of the National Writers Union, in response to the inquiry by your committee about support for the creative economy, to which we have been belatedly alerted by colleagues working for creators’ rights in the U.K. The National Writers Union (NWU) is a national labor union that advocates for freelance, contract, and self- employed writers. The NWU includes local chapters throughout the U.S. as well as at-large members nationwide and abroad, including in the U.K. The NWU works to advance the economic conditions of writers in all genres, media, and formats. NWU membership includes, among others, book authors, journalists, business and technical writers, website and e-mail newsletter content providers, bloggers, poets, playwrights, editors, and academic writers. The NWU is a national amalgamated union (Local 1981) of the United Auto Workers, AFL-CIO. 220 Not printed. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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As writers whose work is likely to be impacted by U.K. legislation and regulations, the NWU is gravely concerned that measures being considered by the U.K. Parliament and the U.K. Intellectual Property Office, including the provisions of the Enterprise and Regulatory Reform Bill concerning “orphan works” and Extended Collective Licensing (ECL), would: (1) Violate the obligations of the U.K., pursuant to the Berne Convention, with respect to the rights of authors of works first published in the U.S. and elsewhere outside the U.K.; (2) Misidentify many works first published in the U.S. and other countries—particularly works simultaneously published in multiple countries, U.K. editions of works previously published in different editions in the U.S., and works first published online on servers in the U.S.—as having been first published in the U.K. and as being “orphan works”; (3) Authorize reproduction and use of U.S. and other foreign works without the permission of the author (or other holder of the particular rights being exploited) in ways that interfere with the “normal commercial exploitation” of rights to those works; and (4) Impose burdensome “opt out” and/or “claim” requirements, constituting “formalities” prohibited by the Berne Convention, on foreign authors who do not want our work included or authorized for reproduction or use through “orphan works” or ECL schemes. (The costs which would be imposed by these proposals on authors, whether in the UK or abroad, of searching lists of works to which some of the rights had provisionally been identified as “orphaned”, are entirely omitted from the Impact Assessment prepared by the IPO, even though these costs would manifestly be the largest category of costs imposed by the “orphan works” scheme.) The NWU has already brought these concerns to the attention of the U.S. government. In August of this year, the NWU submitted comments to the U.S. Intellectual Property Enforcement Coordinator, in which we said that, “These laws and legislative proposals violate, or would violate if enacted, the rights of U.S. writers and the obligations of foreign governments to the U.S. as parties to the Berne Convention. As such, they call for strong diplomatic protests by the U.S. and the invocation, if they are enacted, of appropriate treaty enforcement mechanisms and sanctions for noncompliance with treaty obligations.” (This NWU submission to the IPEC, which incorporated our white paper on “Facts and Fallacies of Orphan Works”, is available at and is attached to this letter.)221 We urge Parliament and the IPO to consider carefully the inevitability that works first published abroad will be swept up in the proposed “orphan works” and ECL schemes, and the implications of this for U.K. compliance with its obligations pursuant to the Berne Convention. To this end, we urge that Parliament and the IPO open direct consultations with foreign writers and with groups such as the NWU which represent the interests of foreign writers. We thank you for the opportunity to have our submission considered in your inquiry. We will be happy to consult with you, your staff, or the staff of the IPO on these issues. We waive any objection to the publication of this submission and our contact details. November 2012

Written evidence submitted by Edge Investment Management Ltd About Edge Edge Investment Management Limited (Edge) is a specialist fund manager focused on the entertainment and media sector with investments ranging from children’s character animation to live music, from literary licensing to mobile apps and from social networks to media technology. Edge is best-known for Edge Performance VCT, the UK’s largest venture capital trust, which has raised nearly £120 million to be invested in growing companies in the creative industries. Edge believes that in “people businesses” like entertainment and media, access to well-networked and experienced executives is a key indicator of success. Edge applies this philosophy to its own organisation with directors of Edge companies including the UK’s best-known impresario Harvey Goldsmith, former HMV and EMAP Chairman Sir Robin Miller, superstar DJ Pete Tong, Elton John’s manager Frank Presland, Eric Clapton’s manager Michael Eaton and Edge Group founder and renowned entertainment industry dealmaker David Glick.

Summary — Access to ﬁnance is a particular barrier to the growth of emerging companies in the creative industries; — Key factors in this include a gulf in understanding between the investment industry and the creative sector and a lack of information sources on available sources of ﬁnance; — We believe that Government could address these issues at relatively modest cost; 221 Not printed. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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— Tax reliefs have an important role to play in directing investment to growing companies and Government has provided a number of such mechanisms, some available to a broad range of sectors (for example Venture Capital Trusts and the Enterprise Investment Scheme) as well as some targeted specifically at the film, TV and games sectors; — We do not believe there is any need to create further specific tax reliefs aimed at the creative sector; — However, we suggest strongly that existing schemes be reviewed to ensure they do not contain inbuilt biases against the creative industries; — For example VCT and EIS funds are effectively prevented from investing in companies which generate more than 20% of turnover from licences, copyrights or other intellectual property which has been acquired rather than developed internally. We believe this limit is based on a misunderstanding of the realities of the creative industries, and that it should be raised; — In addition, we propose closer monitoring of the outputs of specific tax reliefs and the setting of specific targets by Government of the amount of investment such reliefs generate for specific sectors—such as the creative industries; — Such targets would require closer coordination between relevant Government departments (DCMS, BIS, HM Treasury), something which in any case is desirable to improve the effectiveness of Government policy towards the creative industries.

Specific Responses to the Inquiry Question: Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector Access to finance is a significant barrier to the growth of small and medium sized enterprises (SMEs) in all sectors. This is not a problem restricted to the UK. A recent study by the European Central Bank discovered that 18% of 7,500 SMEs surveyed across the European Union said it was their biggest single obstacle to growth.222 The problem is particularly acute in the creative industries. In the music business, for instance, improving access to finance and lobbying Government on the issue has long been a priority for organisations ranging from the Association of Independent Music to the Music Managers Forum, the BPI and UK Music. Government has acknowledged the specific problem which exists in the creative industries by introducing tax reliefs for film and more latterly, computer games. An important reason for the difficulties creative companies encounter in raising finance was identified by a ground-breaking Demos study—the perception within the financial community that somehow the creative industries are more risky than other sectors.223 The study established through the analysis of Companies House data that start-ups in the creative industries are no more risky than start-ups generally and are less risky than those in some sectors (such as hotels and restaurants). It concluded, “The lazy assumption that the creative industries are inherently risky is harming Britain’s path to growth.” While the Demos study made a powerful case, the misperception of risk in the creative industries is difficult to budge. Edge encounters it among investors frequently. We believe it is compounded by the often unrealistic expectations of entrepreneurs in the creative industries when considering external investment. Too often their passion for their business can blind them to the reasonable requirements of investors for information disclosure, board influence and return on investment. In short there is a specific and substantial gap in understanding between the creative and investment sectors. Because there is no sustained history of third party investment in the creative industries, the problem is exacerbated by a lack of aggregated information on, for example: — Sources of private sector finance for the creative industries. — Where the specific gaps in finance provision lie (by size or stage of company). — Historical return on investment data by sector (music versus film versus games etc). The lack of such information means prospective investee companies do not necessarily know where to find investors. It means prospective investors encounter nothing to challenge the entrenched view that the creative industries are not for them. Perhaps most importantly, the lack of such information means that policy-making in this area is under- informed by hard fact. Edge proposes to the Select Committee that one relatively low cost intervention would be for Government to commission research which aggregated data on private sector sources of investment in the creative 222 www.ecb.europa.eu/press/pr/date/2012/html/pr121102.en.html 223 Risky Business by Helen Burrows and Kitty Ussher (Demos, 2011) cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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industries, which thereby identiﬁed current gaps in private sector provision and which highlighted examples of best practice and successful investment in Britain’s creative economy. We believe such research in itself would act as a spur to further investment in the sector. It would also ensure that the debate about the access-to-ﬁnance gap in the creative industries, much of the evidence for which is at this point anecdotal, is properly informed by market data.

Question: The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget Edge believes that tax reliefs have an important part to play in directing investment which would not otherwise be provided to small and medium-sized enterprises. Edge Performance VCT is itself a successful example of the use of such tax reliefs with nearly £120 million raised for the creative sector since 2006. Tax reliefs are an important tool by which Government can direct investment to where it is most needed, but it is also a vital element in ensuring the competitiveness of “UK plc” versus other countries, many of which have more beneficial tax regimes or specific tax breaks. In general we agree with HM Treasury’s historic position that non-sector specific tax reliefs (such as VCTs) are more effective and less prone to abuse than sector specific reliefs. We accept that there are good reasons for specific reliefs for challenged sectors such as film, videogames and high-end animation. However we do not see any pressing need to extend specific reliefs to sectors such as music, where we believe the recently-introduced Seed Enterprise Investment Scheme (SEIS) could do much to assist with project financing. Such a generalist approach to reliefs, however, needs to be informed by an understanding of the specific characteristics of the creative sector. VCT and EIS funds are effectively prevented from investing in companies which generate more than 20% of turnover from licences, copyrights or other intellectual property which has been acquired rather than developed internally. This means, for example, that an investment in a small music publishing, book publishing, television or record company which has bought an existing catalogue is problematic, even if the investment would be used for developing new IPR and therefore is unquestionably legitimate risk capital. While historically HM Treasury has been prepared to use some discretion on the admissibility of particular investments, the benchmark remains 20%. The problem is exacerbated by the fact that there are no phasing provisions on the 20% limit. This means, for example, that if a new music publishing company were, on day one, to acquire an existing publishing catalogue and separately sign up a new songwriter, then the company would be earning immediately from the catalogue whereas the process of writing the song, then recording, then releasing and finally receiving royalties could take at least a year or two. Even if, once that process is over, the vast majority of the company’s revenue were to be derived from internally-developed intellectual property, the fact that 100% of its revenue in the interim were derived from the acquired catalogue would mean the company would not qualify as a valid investment under VCT and EIS rules. Edge believes this 20% limit on acquired IP is an indication of how general tax reliefs can contain an inbuilt bias against the creative industries; Edge suggests to the Select Committee that all existing generalist tax reliefs for SMEs (such as VCT, EIS and SEIS) should be reviewed with input from industry and the three relevant Government departments (BIS, DCMS, HM Treasury) to ensure they properly meet the needs of the creative industries. A further focus of attention, we believe, should be clarifying the success criteria for the tax reliefs which are available. Too often tax breaks seem to be created in a vacuum with no clear sense of desired outputs. Once they are in operation, there seems to be little ongoing monitoring to ensure their continuing effectiveness. In the case of VCTs, for instance, the total amount of new money raised by the sector to invest in SMEs in the year to April 2012 declined by more than a quarter to just £270 million compared with the previous year. Given that the relief was created in order to increase the flow of new money to SMEs, this should be regarded as a cause for concern. It is understandable given the current state of public finances that the Treasury should seek to minimise tax reliefs, but this must be done with an awareness of the upside they were created to generate, both in terms of economic activity and of overall tax receipts. Research by the Association of Investment Companies (AIC)224 suggests that for every £1 of upfront income tax relief received on VCT investment, £7 of new turnover is recorded.. Further, the AIC estimates that overall 224 Delivering Growth—The Role of VCTs, AIC, April 2012. www.theaic.co.uk/Documents/Media%20Centre/ Delivering%20growth%20-%20The%20role%20of%20VCTs%20May2012.pdf cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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tax payments from VCT investee companies over the minimum ﬁve year life of a VCT investment are 3.5 times the value of up-front income tax relief received. As well as setting success criteria for tax reliefs generally, we believe there should be speciﬁc success criteria to ensure that the creative industries receive their “fair share” of the tax-advantaged investment capital. The precise measure requires further investigation, but if the creative industries account for 6% of GDP, there should at least be monitoring to discover what percentage of tax-advantaged venture capital they account for. It is important that any such criteria are set with expert input from the creative industries and all relevant Government departments. Edge suggests to the Select Committee that more granular success criteria for existing generalist tax reliefs for SMEs (such as VCT, EIS and SEIS) are established with input from industry and the three relevant Government departments (BIS, DCMS, HM Treasury. November 2012

Written evidence submitted by the British Library 1. Summary — The British Library is the national library of the United Kingdom. Our mission is to advance the world’s knowledge and we believe that “knowledge creates the new”. By opening up and connecting people to our collections we aim to inspire and enable more people to carry out research, create new businesses and develop their ideas. — The Library is a catalyst for creativity and supports over 10,000 creative practitioners from the point of inspiration to researching their products and services, through to commercialisation of their ideas. — The Library has a unique offering for the creative industries since it helps people at all stages of their business. The Library works with a number of partners in providing and improving its services. — The British Library operates at the fulcrum of the copyright balance. It has an interest in ensuring that British IP law simultaneously promotes the UK’s R&D sector and protects the interests of British creators. — Many users from the creative industries are interested in repurposing content for their projects. Large parts of the Library’s collections are within copyright and their use can be unnecessarily trammelled if the rights clearance process is overly lengthy, complex or unsuccessful. — The British Library welcomed the Hargreaves Review of Intellectual Property Growth and is pleased that the Government has begun to implement the recommendations. These will facilitate mass digitisation by streamlining rights clearance, allow the Library to preserve its collections and enable modern day research activities to be lawful. — The Hargreaves Review found that SMEs are not sufﬁciently well served by those providing advice and information on Intellectual Property Rights. The British Library’s Business & IP Centre provides free IP information and advice to entrepreneurs and SMEs, with subsidised workshops and free one- to-one advice. — In relation to skills, the British Library enables creatives to use research to develop and add value to their work. It offers access to an unparalleled collection of material and a range of research services. — The Library has a role to play in helping creative practitioners to be more business savvy, sustainable and proﬁtable through its Business & IP Centre. More than 20% of the users of the Centre are from the creative and media sectors.

2. Introduction The British Library is the national library of the United Kingdom and one of the world’s greatest research libraries. We acquire, preserve and give access to over 150 million items, ranging from historical manuscripts, books, journals and maps to patents, sound recordings, photographs and the latest digital media. The Library is a source of inspiration, a resource for research and a driver of innovation for a wide range of sectors: higher education and academia, business, entrepreneurs and SMEs, schools and lifelong learning, the general public, and the creative industries. Our mission is to advance the world’s knowledge and we believe that “knowledge creates the new”. By opening up and connecting people to our collections—through innovative digitisation projects, research, learning and business programmes—we aim to inspire and enable more people to carry out research, create new businesses and develop their ideas, beneﬁting the whole of society. Established by its own Act of Parliament in 1972, the British Library operates as a non-departmental public body, accountable to Parliament and under the arm’s length supervision of the Department for Culture, Media and Sport. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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We are responding to two particular areas of interest to the Committee where the Library has evidence to contribute: — “The impact on the creative industries of the Hargreaves Review of Intellectual Property and Growth (including the Enterprise and Regulatory Reform Bill)” — “Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this”

3. The British Library and Creative Industries The British Library is a catalyst for creativity and supports creative practitioners from the point of inspiration to researching their products and services, right through to commercialisation. There are over 10,000 creative users of the Library’s resources including authors and writers, artists, film-makers, designers and those from the theatre and performing arts. More than 20% of the users of the Library’s Business & IP Centre are from the creative and media sectors. We know, for example, that double Man Book winner Hilary Mantel used the Library while writing Wolf Hall. Our previous Chief Executive, Dame Lynne Brindley, wrote in 2010: “Hilary Mantel, a regular user, described how, in writing Wolf Hall, she could find out much about Thomas Cromwell’s public life, but little about his private life. So she built an “edifice of speculation” on a foundation of evidence: the standard historical texts, biographies and Cromwell’s correspondence.”225 The Library has a unique offering for the creative industries since it helps people at all stages of their business. It is a one stop destination: — An unparalleled collection of resources to support inspiration, innovation, research and development, with 150 million items from historic manuscripts, Japanese woodcuts, vintage knitting patterns and soundscapes of the rainforest. — Business advice and intellectual property guidance to protect and commercialise ideas and set up (and grow) a business. A wealth of free business information with a value of £5 million and practical resources such as workshops, advice sessions and events at the Business & IP Centre. — An inspiring programme of activities for designers, fashion designers, writers and film makers. The programme includes an annual Spring Festival, creative workshops and creative residencies. The Library works with a number of partners in providing and improving its services for creative practitioners. These include Kings College London, Queen Mary University, London College of Fashion, Central Saint Martins, Craft Council, British Fashion Council, Design Council, London Design Festival, BBC and BFI. The Library consistently seeks new ways to meet the needs of researchers, including those from the creative industries. Most recently, in October 2012 the British Library began piloting three new sound and moving image services in its Reading Rooms. These include a broadcast news service; a database of over 15 million listings for all UK television and radio broadcasts since 1995, developed by the British Universities Film & Video Council (BUFVC); and the BBC Pilot Service which combines access to 2.2 million programmes from the BBC’s catalogue with the ability to watch and listen to over 225,000 off-air BBC programmes from the last five years.

Case Study: Spring Festival—A Celebration of Creativity, Fashion and Design The British Library held its ﬁrst Spring Festival in March 2012 attracting over 1,800 people from across the creative sphere. It was a ﬁve day celebration of creativity, fashion and design aimed at the creative industries with workshops, talks, and a market on the piazza, attracting top names such as Quentin Blake, Neville Brody, Jamie Hewlett and Emma Bridgewater. Planning for the 2013 festival is underway. Spring Festival attendees said: “It drew attention to the creative work and products made by users of the Library, showing it’s not just a place to study the past or for authors.” “I absolutely loved the Spring Festival workshop at LATE, the house of illustration really brought the evening to life. I wish there were more creative evenings like this.”

Case Study: Clio Barnard Clio is an artist and filmmaker whose work has been shown in cinemas, at international film festivals and at galleries including Tate Modern and MoMA, New York. Her latest film “The Arbor” was nominated for a BAFTA Film Award. It tells the true story of Bradford playwright Andrea Dunbar (The Arbor, Rita, Sue and Bob Too) and her daughter Lorraine, revisiting the short 225 Please see www.telegraph.co.uk/technology/internet/8065521/Our-libraries-must-branch-out-into-a-world-of-tweets-and- blogs.html cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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life and harsh vision of the “genius straight from the slums” who enjoyed a precocious burst of success in the 1980s. The film attracted significant attention through its use of voices. Clio had initially discovered recordings of Andrea Dunbar in the Library’s Sound Archive. She said she “found it incredibly moving to hear her voice— the softness of it, and her youth.” The human voice remains central to “The Arbor” film, following interviews— sound only—that were subsequently recorded with members of the Dunbar family and others.

4. Hargreaves Review Of Intellectual Property And Growth The British Library operates at the fulcrum of the copyright balance. It has a unique position as a legal deposit library, a purchaser or licensee of copyright content and materials, a licensor of its own intellectual property, and a support service to users and owners of intellectual property be that for academic research or business development. The Library has an interest in ensuring that British IP law simultaneously promotes the UK’s R&D sector and protects the interests of British creators.

Repurposing Content Many creatives use the Library for context for their work. For example, an author could research historical facts for a novel, or a playwright might research drawings and fashion magazines for costume designs. However, many users from the creative industries are also interested in repurposing content for their projects. The Library does have collection items that are out of copyright (and some major initiatives to make these available digitally) and the Library is also the owner of copyright in many instances, particularly in Sound and Vision. However, large parts of our collections are within copyright and their use by the creative industries can be unnecessarily trammelled if the rights clearance process is overly lengthy, complex or unsuccessful.

Hargreaves Review The British Library welcomed the Hargreaves Review of Intellectual Property Growth and is pleased that the Government has begun to implement the recommendations. We are however eager, along with many in the research and academic sector that all the recommendations are implemented as soon as possible as we have already experienced international competitive disadvantage since Gowers made many of the same recommendations six years ago. Measures that are particularly positive for the Library and its users are: — A “Digital Copyright Exchange”; a marketplace for digital rights (the British Library sits on the Copyright Hub Launch group). — A solution to orphan works and extended collective licensing to facilitate mass digitisation. — Extending exceptions in law for preservation, fair dealing for sound and film, and text and data mining. — Preventing contracts overriding copyright law (often making the flexibilities granted by Parliament null and void). Taken together these will facilitate mass digitisation by streamlining rights clearance, allow the Library to preserve its collections and enable modern day research activities to be lawful, as standard practice in other developed countries. In relation to the orphan works and extended collective licensing arrangements in the Enterprise and Regulatory Reform Bill, the Library believes that these represent a balanced way forward, and that sufficient safeguards are proposed to protect the interests of rightholders. These include proof of a diligent search for orphan works rightsholders, opt-out measures, payment mechanisms and wide consultation by collecting societies. The Bill will facilitate the mass digitisation of in-copyright 20th century material. This will result in a much richer research environment and our users will have access to material that is largely unavailable to them now. This will lead to greater use of the content, new discoveries and more dynamic educational environment. Many of the Hargreaves recommendations (other than those included in the Enterprise and Regulatory Reform Bill) are already covered by the 2001 Information Society Directive, or are minor amendments to the existing framework of the Copyright, Designs and Patents Act. As they do not require a new act of Parliament, the appropriate process for such amendments to the CDPA is secondary legislation.

IP Advice The Hargreaves Review also found that SMEs are not sufﬁciently well served by those providing advice and information on Intellectual Property Rights and recommended action to give SMEs access to lower cost IP advice. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The Library itself has found that the biggest barriers that SMEs face in protecting and exploiting their IP are finding affordable services, knowing where to go for advice and support, and the feeling that the IP system favours large companies. The British Library’s Business & IP Centre provides free IP information and advice to entrepreneurs and SMEs, with heavily subsidised workshops and free one-to-one advice clinics. We are the library of the Patent Office, holding 60 million patent specifications from 40 countries worldwide. A survey in February 2011 showed that over a third of respondents had used the British Library’s IP-related services which had contributed to: — Helping them understand about IP and demystify the IP process. — Saving them time and money. — Enabling them to do their own searches on IP (eg patents). — Giving them the knowledge needed to talk to an IP lawyer with confidence.

5. Supporting a Strong Skills Base The British Library enables creatives to use research to develop and add value to their work, be it a novel, a ﬁlm script or documentary, or fashion design. We offer access to an unparalleled collection of material and a range of research services, representing a vital resource in nurturing creativity and driving innovation. As part of developing our services for the creative industries, the Library is involved in a new People, Skills, and Knowledge Exchange initiative with King’s Cultural Institute (KCI) under the Creative Futures programme, bringing together academics and curatorial staff. The long term aim is to generate new forms of engagement and collaboration, test new ideas and stimulate new partnerships, ensuring that research positively impacts on the cultural sector, and, in turn, that the knowledge and expertise within the cultural and creative organisations informs and inspires new ways of thinking within the academic setting. The Library is also a partner in the “Creativeworks London” Knowledge Exchange Hub led by Queen Mary University and funded by the Arts and Humanities Research Council. We are particularly involved in the research strand looking at London’s Digital Economy, exploring emerging digital technologies and new business models, as well as developing technical solutions to the challenges (such as copyright) that creative SMEs and cultural institutions face in developing and providing access to digital resources. As well as supporting creative practitioners to be innovative, the Library gives them the skills and knowledge to commercialise their ideas. The Business & IP Centre helps creative practitioners to be more business savvy, sustainable and proﬁtable (see below). In a related area, the Library has also had preliminary discussions with the Technology Strategy Board’s Connected Digital Economy Catapult regarding the needs in digital economy and how key partners might work together to ensure the UK can innovate in this area. The Catapult “will encourage new and sustainable ways for digital media and content providers to generate value from their products...and help business to take advantage of the opportunities arising from the way information about our environment and physical objects is becoming available in the digital domain.”226

Case Study: Business & IP Centre The British Library provides dedicated services for businesses, entrepreneurs and SMEs through its Business & IP Centre. This includes 6,900 users from the creative industries as well as high-tech companies and inventors. The Centre provides free access to over £5 million worth of business and intellectual property information and runs a programme of workshops, one-to-one advice sessions and networking events. Significantly, it also helps users to understand the principles of intellectual property (copyright, trademarks, patents, registered designs) and their rights for their own creative work. Since opening in 2006, the Business & IP Centre has welcomed over 300,000 entrepreneurs and SMEs including repeat visitors, and delivered advice and skills training to over 30,000 people. As a result it has helped to create 2,775 businesses, of which 40% are owned by women, 29% by ethnic minority groups and 10% by people with a disability. An additional 3,345 jobs have been created in new and existing businesses, and overall, these businesses have increased their turnover by £153 million. Significantly, only one in ten businesses had failed after year three, compared with just under four in ten across the UK; 96% of users would recommend it to others and 84% could not have achieved their results without the Centre’s help. Between 2011 and 2014 the Library will support 150 high growth SMEs though a new ERDF-funded programme, Innovating for Growth. Given the success of the Business & IP Centre model, the Library believes there is huge potential to expand services across the country. In 2011 a pilot service was initiated at Newcastle City Library and in 2012, the Library, working in partnership with the Intellectual Property Office, was awarded a £100,000 grant to undertake a feasibility study into how the model might be replicated in other city libraries. Discussions are 226 https://catapult.innovateuk.org/connected-digital-economy cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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ongoing with the libraries in Birmingham, Leeds, Liverpool, Manchester, Shefﬁeld and Newcastle to establish a network in 2013 and 2014. November 2012

Written evidence submitted by Activision Blizzard UK Ltd Activision welcomes the Culture, Media and Sport Select Committee inquiry into support for the creative economy and is grateful for the opportunity to submit written evidence.

Activision Activision Blizzard is the largest entertainment software publisher in the world with leading positions across every major category of the rapidly growing interactive entertainment software industry and more than 7,000 employees worldwide. In the UK, Activision has its European headquarters at Stockley Park, a studio in Leamington Spa (FreeStyle), a mobile studio in Leeds (the Blast Furnace), and distribution facilities in the West Midlands. In total, Activision currently employs over 400 people in the UK, predominantly in high-skill, high-value roles, in addition to working with an extended network of seven independent studios development across a variety of projects and remits. Activision’s portfolio includes Call of Duty, recognised globally as one of the world’s largest entertainment properties across all genres, as well as Skylanders, Spider-Man, X-Men, James Bond and Transformers, and Blizzard Entertainment’s StarCraft, Diablo, and Warcraft franchises including the top subscription-based multi- player online role-playing game, World of Warcraft. Activision serves a UK video game market which in Q2 of 2012 was valued at £235 million with 40m games sold and total gamer time of 160m hours each week. The total boxed and digital UK video game retail market was worth close to £3 billion in 2011. Activision is a member of UKIE and we support and endorse their submission to the inquiry. Activision is keen to work with other industry members, the government and other partners, to allow the UK’s games and interactive entertainment sector to continue to thrive and make Britain a global hub for technology growth and digital creativity. This is a significant challenge in an extremely competitive global market. The Government’s Video Games Tax Relief proposals are extremely welcome but it really is only the start if the UK is to retain its competitive edge. Activision would like to see the Government and the sector collaborate on developing a long-term strategy to keep the UK competitive against the best that California, Canada and China can offer. This would need to include skills, home grown and imported talent, fiscal incentives and ways to stimulate creative hubs and clusters in the UK. There is also a need for greater public recognition of the importance of the sector to the UK. What senior ministers say makes a real difference to global sector sentiment and this needs to be prioritised by Government as a quick win. We wish to respond specifically to four of your seven areas of inquiry, as follows:

Q: Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector In common with other sectors the fast-moving, extremely globalised games sector needs a range of attractive sources of finance to thrive. This is particularly important for the games sector because of the large number of SMEs involved, with numerous small studies and even individuals playing key roles. Competitor countries such as Canada are developing innovative ways of ensuring access to finance for games companies and the UK Government must learn from global best practice in this regard. As an example, and as noted in UKIE’s submission to this inquiry, there is an opportunity for crowdfunding to play a greater role either along the donations, debt or equity model. We endorse UKIE’s call for greater coordination between Government departments to create the right regulatory framework to allow crowdfunding to flourish.

Q. The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget Activision has served on the HM Treasury Video games tax relief (VGTR) working group and fully support efforts by HM Treasury to encourage investment in the UK video game sector through the introduction of targeted corporation tax reliefs. We welcome the Budget 2012 measures on tax relief for the games industry, and wider moves on overall corporation tax levels. Activision recently opened the Blast Furnace, in Leeds, with an initial headcount of 35, partly because of the incentives offered under this programme although largely because of the great talent pool that exists within the UK. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Activision is keen to continue to grow its business in the UK, and would strongly encourage the government to continue to offer and improve this relief. In particular, we urge them to remember that the creative industries are fast-moving, so legislation should be drafted sufﬁciently widely to take into account both iteration and innovation. In particular mobile gaming is almost certainly one of the key areas for future sector growth, and is a key area of strength for Activision. Mobile has lower barriers to entry, plays to the UK’s creative strengths, and should allow the UK sector growth to grow at all levels. There is therefore a golden opportunity to make the UK a centre of excellence for mobile gaming but only if care is taken to future-proof regulatory and ﬁscal measures. We would also urge the government to consider introducing further incentives to improve skills and training in the sector, for example by offering extra relief for businesses which offer structured internships and/ or apprenticeships. Additionally we would encourage the government to understand that as a global industry, the tax incentives need to be understood, available and appealing across a broad range of organisations, from the small independent developer to the large global publisher. Each will need to understand the incentives available and be able to access them readily. In the case of the global publisher, they will be benchmarking those incentives against those available in other territories with competing schemes and talent pools. Complexity in understanding what and where funding is available and how readily such funds can be accessed or what tax scheme will apply will be a barrier to entry and act as a disincentive for that publisher. The current schemes in the UK are not clear or readily accessible and it fails to local trade bodies, such as UKIE or TIGA to act as the interpreter and provide the pathway to funding.

Q. Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this For games development to continue to thrive in the UK, it needs people with the right skills: technical, artistic, business and creative. Activision is very supportive of the government’s recent efforts to improve computer science and ICT teaching in schools but this now needs to go further to focus on ensuring that there are more qualified teachers and that the qualifications gained are widely recognised as valid and rigorous. In addition, we are keen that as well as pure technical skills, creativity is taught and nurtured in the curriculum. Breadth is as important as depth in this area. Once the upcoming changes in the curriculum and qualifications regime are complete, we urge the government to keep both under close review; this is a fast-changing and highly innovative sector and what works for 2015 may no longer be suitable by 2020. Activision is also exploring collaboration with higher education institutions with a view to ensuring that the increasing range of games courses involve the right mix of theory and practical skills. Government encouragement of such partnerships would be welcome. We discuss the role of universities in developing clusters below.

Q. The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector In our experience, and certainly for our business, the video games industry is not as London-centric as many other tech sectors; indeed, our studios are all outside London. However, tradition and the government’s recent efforts to promote Tech City in London inevitably mean that much creative and technical talent gravitates towards London. There are already some key hubs around the UK where video games development is healthy and where good university courses reinforce this, for example Dundee and Liverpool. Nonetheless, because of the particularly agile nature of games development and developers (with the developments in technology the games industry has expanded to a wider audience allowing better access to a wider group of individuals essentially becoming a modern day cottage industry), regional bodies and local authorities could do much more to attract mini-hubs and small start-ups in particular, for example by offering ﬂexible and affordable workspace, partnering with existing developers to offer incentives on business rates or in other ways to expand, and enabling better connectivity and communications infrastructure. Local Enterprise Partnerships should collaborate with the sector and with higher education institutions to create the right strategies to allow clusters to develop.

Conclusion Activision welcomes important Government initiatives such as the VGTR, and we are encouraged by recent contact with DCMS and with UKTI that suggests the importance of the sector to UK plc is recognised. However, we are concerned that beyond the VGTR there is no strategy for the UK to maintain and improve its edge in a ﬁercely competitive global market. In short, the UK’s strengths in creativity and innovation must be matched with the right regulatory, ﬁscal and commercial environment if Britain is to remain a global centre for the games sector. November 2012 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the Chartered Society of Designers Issues The Committee is inviting written submissions and requesting views on the following issues:

Committee Issue1 How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games CSD RESPONSE — Celebrate the success of design in delivering a unique visitor, viewer and participant experience. Venue design, as an integral part of service design, was key to the achievements of the Olympic and Paralympic games and any stimulation of the promotion and study of this subject area could lead to more competent practitioners. The games provide perhaps one of the best case studies on the subject. — Design played a crucial role in enhancing performance in the games in both the equipment used by participants and the venue facilities. Design for sport could become an initiative within the design sector that could engage at all ages and all abilities within the populous.

Committee Issue2 Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector CSD RESPONSE — In terms of design one of the key barriers is possibly the lack of comprehensive representation from within the sector or government. — The sector is represented by several SSC’s and since April, these bodies have different accountability and funding streams making it difficult to follow how engagement should be undertaken. — Other bodies, trade and councils are all guilty of non-cooperation across the sector. As the Professional body we have a duty to the individual members rather than companies or institutions and therefore we have a different role to play than trade bodies. As a charity we must act in the public benefit and therefore have a role to play in finding platforms upon which various sectors of the design industry can collaborate or at least engage in a common language. An understanding by government and acceptance of the different roles organisations play could greatly assist in ensuring understanding if not cooperation and most certainly avoid division. — An understanding by government of the role of design leading to an overall government strategy on design would assist in directing the bodies, both public and private to address this barrier and potentially others too.

Committee Issue3 The impact on the creative industries of the independent Hargreaves Review of Intellectual Property and Growth, and the Government’s Response to it. The impact of the failure, as yet, to implement the Digital Economy Act, which was intended to strengthen copyright enforcement. The impact of proposals to change copyright law without recourse to primary legislation (under the Enterprise and Regulatory Reform Bill currently before Parliament) CSD RESPONSE Intellectual Property is the new currency of design and must at all costs be protected. The Society would be concerned about any form of quasi-judicial approach to strengthening IP enforcement preferring the strength afforded in primary legislation.

Committee Issue4 The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget CSD RESPONSE Design is merely one aspect of business and as such its growth as a sector is dependent on the growth of the economy as a whole. The Society has no doubt that ﬁscal policy can stimulate economic growth but would like to see any tax relief targeted at overall initiatives which include all aspects of the business model and value chain. Isolating design as a component of business is not desirable and a “joined up” approach to tax relief in certain sectors that make use of design would be welcome. It is crucial that such an initiative is proven and as such the government should fully research and report outcomes to the design sector and industry. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Committee Issue 5

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this

CSD RESPONSE — Working alongside industry and education through the CSD Course Endorsement Programme (CSD CEP) we deliver on-going support to enable partnerships between industry and education and so have a strong understanding and experience of how skills and education are valued, integrated and engaged with by industry. — The CSD CEP has three awards for design education across vocational, academic and professional training (For more information go to http://www.csd.org.uk/index.aspx?id=181). For those courses that meet the robust criteria of CEP, and therefore considered ﬁt for purpose by the professional body, we are committed to engagement ensuring the individuals who graduate successfully are professional and thus approach the profession of design, with the creativity, professionalism, skills and knowledge the Society expect of its members and industry expects of its workforce. — The CSD CEP model of delivery supports the skills base of the students, the lecturers, technicians, teachers and industry representatives on this programme. — Currently the model focuses on short bursts of exposure of students to industry encouraging ongoing collaboration and partnership. In addition we are developing strong support programmes for the technicians and teachers/lecturers to recognise their skills and knowledge. — This model promotes and contextualises professionalism in design and is proving to be successful in truly bridging the gap “from Learning to Earning”™. Through strengthening the delivery of design skills and on-going support of the new generation of designers, the Society is seeking to strengthen professionalism in design and ensure robust progression pathways into industry. — CSD would like to see entry into the sector through non graduate routes developed and supported by industry and education—including ﬁt for purpose apprenticeship frameworks within design. — CSD support those organisations who run work placements, live projects, paid internships, etc. and would seek to ensure these are maintained with strong assessment processes in place for students to fully understand the value these placements have in their career development.

Committee Issue6

CSD RESPONSE — CSD support hubs and clusters, however, support for those businesses which are designing and contributing to the creative industries as a whole without necessarily innovating should equally be supported and considered in on-going growth agendas. — The Society is concerned that any artiﬁcially created silos may inhibit cross disciplinary understanding, knowledge transfer and ultimately practice. Such separations need careful management and sensitive analysis.

Committee Issue7

The work of the Creative Industries Council and other public bodies responsible for supporting the sector

CSD RESPONSE — The CIC appears to have a limited remit in terms of its representation of design (view a full list of design sectors227 CSD are engaged with) and the Skills Group report with over 25 recommendations whilst valuable, did not cover all aspects of the sector. — CSD value the concept of the CIC and the Skills group, but the members of the Society are unsure as to the extent of its inﬂuence or whether it truly represents design providers or those who use design, both of which are key CSD stakeholder groups. November 2012

227 www.csd.org.uk/index.aspx?id=85 cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the City of London Corporation

This letter responds to the recent invitation to submit written evidence to the above inquiry. The City Corporation is not in a position to reply in full to the questions posed by the Committee in its call for evidence but hopes that its experience in nurturing a cluster of creative firms on the “City Fringe” might be of interest to the Committee’s inquiry. It is important to recognise that many creative industries, and certainly those in and around the City Fringe, are small and medium sized enterprises (SMEs) and their presence contributes to maintaining and enhancing the City’s position as a leading international financial and business centre and contribute to the area’s economic prosperity. However, London still faces significant challenges in maintaining the productivity and sustainability of SMEs. City fringe boroughs have high SME start-up rates, but they also suffer from some of the highest failure rates. Finance plays a key role in the creation of SMEs, alongside other support. The Corporation therefore believes that the encouragement of bank lending for SMEs remains important. In order to support a thriving SME community, the Corporation has a substantial business support programme to facilitate the development and growth of small businesses in the City fringe through the provision of premises, finance and guidance. In October last year the City Corporation launched “Angels in the City”, a new initiative delivered in partnership with London Business Angels, to increase the awareness of “high net worth individuals” in becoming “angel investors”. Investors bring their financial capacity and business experience to provide funding for innovative high-growth potential entrepreneurs in the City fringes, focusing especially on the “Tech City” area.

The aim of the scheme is to recruit and build a new pool of 125 investors, which, in the longer term, could generate up to £10 million of investment per annum. Through Angels in the City, it is anticipated that at least 45 Tech City businesses will beneﬁt from new investment, which is expected to result in the creation of around 200 jobs a year. Regular “pitching” events are held to give small businesses and aspiring entrepreneurs the opportunity of presenting their ideas to businesses executives.

The City Corporation sponsors a new non-for-proﬁt organisation, called “Entrepreneur First”. Entrepreneur First aims to encourage the younger generations to become entrepreneurs by offering training, tools and potential funding opportunities needed to launch a successful, high-growth start-up. The scheme has also been backed by Microsoft, Silicon Valley Bank and McKinsey & Company. This initiative complements the City Corporation’s facilitation of the “Innovation Warehouse”, an “incubator” scheme in Smithﬁeld providing business advice, networking opportunities and membership of an entrepreneurial community.

Support for aspiring entrepreneurs in identifying partners is provided through the ‘Founders Fit’ initiative which has been set up to help launch and grow start-ups. An event sponsored by the City Corporation in June attended by approximately 25 female entrepreneurs based in the City and City fringes. The event received very encouraging feedback and many women made links with professionals who are willing to join forces with the entrepreneurs as co-founders.

Finally, the City Corporation, through its own historic ties with the North West of Northern Ireland, the City has also fostered a memorandum of understanding between the Tech City Investment Organisation and an emerging social media and entrepreneurial cluster in Derry/Londonderry known as “Digital Derry”. This initiative seeks to encourage both emerging Tech City leaders and businesses as well as potential City-based investors look for similar clusters or hubs which may be of mutual beneﬁt in terms of delivering growth within the UK’s creative economy.

I am sorry that the City was not able to make a full submission to the Committee but I hope this outline is of use. November 2012

Written evidence submitted by Discovery Networks

1. We welcome the opportunity to submit evidence to this inquiry into support for the creative economy, which we believe is timely, as it taps into a growing concern we have about a possible weakening of the UK’s appeal as a hub for international broadcasters.

2. We share the Government’s view that the creative industries have a strong potential for growth. Within those creative industries, the multichannel television sector has already demonstrated that it is capable of growth. Figures from Discovery’s trade association The Commercial Broadcasters Association (COBA), reveal that COBA members invested £623 million in UK television content last year, an increase of 31% year on year from 2010.228 228 The Contribution of the Multichannel sector to the UK Economy, A report for COBA prepared by Oliver & Ohlbaum Associates Ltd, September 2012 (www.coba.org.uk) cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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3. Like Discovery—which has chosen the UK as HQ for its European, Middle East and Africa operations— many of these COBA members are international broadcasters who have chosen to locate their European operations in the UK, bringing important inward investment into the country. 4. The UK has much to offer an international media organisation. Discovery has decided to use the UK as a hub for its European broadcasting and production because we can beneﬁt from a strong skills base, established infrastructure and a relatively benign regulatory framework. However, the UK also has competitors for the role of hub and in a tough economic climate, where technology means that jobs can move seamlessly to other jurisdictions, the UK must ensure its appeal is not eclipsed by others. 5. To retain—let alone grow—its status as a world-leading media hub, the Government needs to understand the critical factors at play in determining where international businesses locate themselves, and do what it can to ensure that the UK continues to represent an appealing business proposition. 6. For Discovery, there are two ways at present in which the UK could increase its support and improve its appeal as an international business hub—a tax incentive scheme that supports documentaries as well as drama productions, and a continued support of the Country of Origin Principle within the AVMS Directive, which allows us to continue to license 70+ international channels from the UK, with the legal certainty that the UK’s regulations will be enforced over those of other jurisdictions.

The UK as a European Hub for International Business 7. Discovery Communications is the number one non-fiction media company in the world, reaching more than 1.8 billion cumulative subscribers in the world in 210 countries and territories, broadcasting globally in 43 languages. 8. We have chosen to base two of our regional operations in the UK—Western Europe and Central & Eastern Europe, Middle East and Asia (CEEMEA)—and hold more than 70 Ofcom licences for channels across the whole of Europe. 9. Discovery’s investment in the UK is considerable: — We spent around £200 million in the UK in 2011 (including all programming, salary and business costs) and employ more than 500 permanent staff in the UK. — We are a core player in the wider broadcasting ecology in the UK. We commission from around 70 independent production companies in the UK and have a strong and successful co-production relationship with the BBC, which has produced ground-breaking natural history documentaries including Planet Earth, Blue Planet, Walking with Dinosaurs and Life. 10. Importantly, Discovery is reflective of the wider multichannel sector in terms of UK investment and the importance of the UK as an EU hub, as a recently published Oliver + Ohlbaum report,229 commissioned by the Commercial Broadcasters Association (COBA), shows: — COBA members are significant UK investors, spending £623 million on UK TV content last year (an increase of 31% year on year from 2010) and are worth £4.2 billion per annum to the UK economy. — The sector has increased direct UK employment by more than 8% since 2010, employing 9,000 people directly and 47,000 indirectly. 11. Crucially, much of this investment from COBA members is inward investment: the UK is the biggest European hub for TV investment amongst COBA members and UK investment amongst this group is higher than all the other European markets combined. 12. International broadcasters like Discovery are drawn to the UK thanks to its strong skills base, established infrastructure and a relatively benign regulatory framework.

The Internal Market for Broadcasting in the EU Needs Support 13. The EU’s Audiovisual Media Services (AVMS) Directive provides the basis for television legislation across the EU, setting out minimum rules on advertising, content standards, child protection, product placement and sponsorship, EU works and access services among other things. 14. The Directive’s Country of Origin Principle was designed so that service providers can license a service in one EU Member State but offer that service across all other EU jurisdictions without the need to comply with any additional rules. This is why Discovery is able to hold UK licenses for the majority of its European broadcasting operations. The principle is also reﬂected in the Council of Europe’s Trans-Frontier Television Convention which applies to European countries which are not EU members providing they have signed and ratiﬁed the Treaty. Discovery also makes use of this Treaty to broadcast from the UK to countries such as Turkey and Ukraine, without the need for additional licensing. 229 COBA 2012 Economic Impact Report, The Contribution of the Multichannel sector to the UK Economy A report for COBA prepared by Oliver & Ohlbaum, September 2012 http://coba.org.uk/coba-latest/coba-latest/2012-economic- impact-report cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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15. For any international broadcaster relying on the legal certainty of being able to base itself in one Member State and be subject to its rules across the whole of the EU and further aﬁeld, any weakening of the Country of Origin principle can have a serious negative effect on that legal certainty, and seriously undermine the rationale for creating a single European hub from which to operate. 16. Discovery is concerned that this important principle has been weakened in recent years and that it is increasingly being challenged by Member States, who believe enforcing local rules is more important than furthering the principles of the internal market for broadcast. Examples of this shift in attitude have manifested themselves in the following ways: — Member States threatening to block signals or prosecute individuals where local regulations relating to advertising or protection of minors differ from UK regulations. — Member States using the Authorisations Directive to insist that any broadcaster wishing to broadcast on DTT platforms is locally licensed and follows local content rules, despite the apparently platform-neutral basis of the AVMS Directive and a clause in the Authorisations Directive which stipulates that only technical rules and not those relating to content can be applied in this case. — Countries which are signatories to the Trans-Frontier Television Convention demanding local licensing in contravention of the Treaty or compliance on pan-regional feeds which happen to touch on their jurisdictions. 17. Discovery believes that to ensure the UK remains attractive as a broadcast hub, the Government has to make a strong defence of the Country of Origin principle. If it is undermined there is a risk that it will not be possible for broadcasters like Discovery to take full advantage of the possibilities put forward by a genuinely open market in content.

The high-end TV tax relief should apply to high-end documentary productions 18. In the March 2012 Budget, the Chancellor of the Exchequer announced that the Government will introduce corporation tax reliefs for the animation, high-end television and video games industries from April 2013. HM Treasury has recently consulted on the rules that will apply to high-end television productions, and the Department of Culture, Media and Sport is on the Cultural Test that will apply to the relief. 19. In response to both these consultations, Discovery has argued that the relief must be designed so that high-end documentaries, as well as dramas, can qualify if the UK is to avoid losing its status as a world- leading centre for documentary making.

The UK’s position as a leading documentary centre is under threat 20. Thanks to the commissioning power of the BBC and the highly skilled workforce that has built up around it, the UK has been a globally-acknowledged centre of excellence for documentary production for a number of decades. However, this position is now under threat: — The UK is unique amongst the core international documentary production markets in its lack of provision of tax incentives for television documentaries. Unlike the UK’s proposed tax incentive, similar schemes in Australia, Canada, the US (at Federal as well as State level) and Ireland230 offer incentives to factual as well as fiction productions. — The UK also faces competition from emerging markets: demand for documentaries in China and India has encouraged the growth of production facilities in Singapore and South Africa, both of which are offering tax incentives for local production. — The international documentary market is characterised by a small, highly-mobile pool of top talent. Thanks to technology, producers and editors can be based anywhere, meaning a programme to be researched in the UK, filmed in Africa, and post-produced in the US. 21. As a consequence, while there has been an increase in UK production from multichannel broadcasters such as Discovery, investment in “big ticket” productions or “super-docs” has tended to be made in places where a 10–20% rebate is available. 22. Unless an appropriately targeted tax incentive is developed to redress the balance, an increasing number of productions that would otherwise have located in the UK will be lured, along with UK talent, to overseas markets where generous financial incentives are available.

How should the proposed tax relief be amended? 23. The main barrier to documentary productions qualifying for support is the proposed cost per hour threshold of £1 million, which does capture the very top end of drama productions but not factual programmes, where average costs per hour are signiﬁcantly lower,231 in part because much lower expenditure is required for on-screen talent. Lower per hour costs are matched by lower budgets for factual productions. For example, 230 Entertainment Partners—Basic Overview of US and International Production Incentives 2012. 231 According to Ofcom’s most recent PSB report, in 2011 the average cost per hour of specialist factual programming was £39 667; for the same year for drama and soaps the average cost per hour was £432 823, almost 10 times as much. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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the BBC’s commissioning tariff only allows a maximum of £300,000 for even “the most ambitious factual programming”, compared to the top category in BBC drama which has a commissioning tariff of up to £900,000.232 24. The difference in production costs is recognised in the tax incentive schemes of the UK’s competitors. Discovery’s research shows that most jurisdictions233 report a cost per hour of around £650 000 for high-end documentary productions compared to that of closer to £1 million for scripted drama, with only the top 3–4% of high-end documentaries produced annually reaching that £650,000 threshold. 25. In order to ensure only genuinely high-end documentaries qualify for any tax incentive, most jurisdictions also make use of tightly-written definitions. For example, Screen Australia funds documentaries but is very clear that it ‘does not invest in programs such as reality or magazine television, infotainment, current affairs, cooking, how-to, sports programs, or projects whose primary market is the education sector.’ They use the regulator, ACMA’s very detailed definition of “documentary” for this purpose.234 The Irish scheme includes “creative documentary” in its tax break scheme, providing a very detailed definition.235 26. In order to keep pace with its competitors, Discovery therefore proposes that the UK incentive scheme includes a cost per hour threshold of £650,000 to a very narrowly defined genre of “documentary” productions, adapting rival tax schemes’ definitions of “documentary” for that purpose. 27. A few amendments to the proposed Cultural Test are also required to allow high-end documentaries to qualify. The Test proposed in the DCMS consultation is geared towards drama productions, with language such as “actor” and “character”, which is not always appropriate for non-fiction programming. The Film Tax Relief Cultural Test (which the TV Test is heavily based on), addresses this issue by making a series of exceptions to documentaries only, allowing the nationality of the “narrator” rather than the “character” to count towards the required total. 28. Discovery therefore recommends that the high-end TV tax relief cultural test adopts similar exceptions for documentary productions as are used in the film test. 29. We believe that by making minor amendments to the proposed tax relief scheme, the UK Government can do a great deal to support the UK’s documentary production sector. If the proposed incentive goes ahead but does not enable high-end documentary productions to qualify the UK risks (at best) losing the opportunity to attract an additional slice of the growing global market for premium factual television production and (at worst) a significant loss of future factual productions, which will increasingly be lured away by the UK’s international competitors’ financial incentives, despite its reputation as a centre of excellence for documentary production.

Conclusion 30. Discovery believes that the UK Creative Economy is strong and has the capacity to be even stronger. However careful consideration should be given to the potentially limiting effect on the development of the UK as a hub for the creative industries if it does not review regularly what the elements are that make it attractive in the first place to business and ensure that it remains competitive with other markets. 31. The global downturn has alerted more than one country to the possibilities that creating a creative industries hub can bring. Many have moved to provide tax incentives for production, games and animation. Many can offer the latest technology and skilled workforces. The UK needs to be able to offer all this and more if it is to remain attractive as a hub. 32. Another element which makes one market more attractive than another for industry is the level of regulation and consistency in its application. The UK is strong in this area but, as a market which is considered as a hub for international broadcasters in Europe, it needs to be a strong guardian of the internal market principles contained within the relevant Directive and it needs to be aware that any changes it makes to regulation in the UK will have an immediate and direct effect on channels outside the UK which are licensed here. 33. Most importantly the UK needs to ensure it has the flexibility within its legislative and regulatory arrangements to deal with the inevitable changes likely to come about as the content market continues to evolve. There should be discussion of whether or not the existing regulation for broadcast continues to be fit for purpose. There should be constant vigilance to ensure the UK remains as attractive in the future as a hub for the creative industries as it is now. November 2012

232 www.bbc.co.uk/commissioning/tv/how-we-work/business-requirements/tariff-ranges.shtml 233 Annual reports and existing thresholds of administering authorities for tax incentives and grants for France, Germany, Canada, Australia and South Africa 234 www.acma.gov.au/webwr/aba/tv/content/requirements/australian/documents/documentaryguidelines.pdf: 235 www.revenue.ie/en/tax/it/leaﬂets/guide_note.doc cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by the British Fashion Council

This submission is made on behalf of the British Fashion Council (BFC) by Caroline Rush (Chief Executive) and Simon Ward (Chief Operating Ofﬁcer).

The BFC welcomes the opportunity to respond to the Culture, Media and Sport Select Committee’s call for submissions relating to the support for the creative industries.

Executive Summary

— The UK fashion industry is advancing its economic position but requires continued government support in a number of key areas to fulﬁl the Chancellor’s ambition for the creative sector to become a “world leader”.

— The fashion industry is rightly perceived as dynamic, young and vibrant and hopeful. These highly valuable characteristics must be grasped by government to spur an important sector of the economy, as well as boost the brand of the UK fashion industry globally.

— Government needs to work with industry to ﬁnd practical and vocational solutions to its approaching skills shortage to sustain its economic growth for the creative economy.

— Government must consider a transitional period for the industry to move away from unpaid internships and implement the long-term skills solutions required, tackling the immediate technical skills shortfall experienced by some businesses and the vacuum of opportunity that will be created for a large pool of graduates leaving college shortly, unable to ﬁnd suitable employment.

— Government must continue to ﬁnancially support the current activities of the BFC and within the industry by other industry partners to maintain the UK’s competitive and creative advantage.

— Government must maximise on the renewed interest for manufacturing high-quality specialist products in the UK and ensure that the appropriate conditions are in place in order to do so.

— Long-term strategic planning is vital to the advancement and continued promotion of designer fashion within the UK creative economy and on a global stage.

1. The Work of the BFC and the Value of UK Fashion

1.1 The BFC is committed to developing excellence and growth in the fashion industry, a signiﬁcant contributor to the British economy. In 2009, the UK fashion industry contributed £20.9 billion (1.7% of total UK GDP) and supported approximately 816,000 jobs—more than the telecommunications, car manufacturing and publishing combined (BFC and Oxford Economics, 2010236). 94% of UK designer businesses operate on a microbusiness level (TBR, 2008237) and the overall economic activity of the fashion industry contributed over £13 billion directly to the Treasury (BFC and Oxford Economics, 2010238).

1.2 The role of the BFC is to nurture, support and promote British fashion talent at a designer level to a global market. The BFC does this through globally recognised events including London Fashion Week and the British Fashion Awards; designer support pathways including NEWGEN and the BFC/Vogue Designer Fashion Fund; and an integrated global communications strategy which embraces creativity and innovation to secure London and Britain’s position as a global leader in fashion (ﬁgure 1). 236 British Fashion Council and Oxford Economics (2010) “The Value of the UK Fashion Industry”, can be accessed at, www.britishfashioncouncil.com/content.aspx?CategoryID=1745 (accessed 14 November 2012). 237 TBR (2008) “Sizing the Skillfast-UK Sectors and the contribution of Microbusinesses” can be accessed from at, www.creativeskillset.org/uploads/pdf/asset_16618.pdf?1 (accessed 14 November 2012). 238 As per footnote 432. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Figure 1

1.3 In the Budget Statement of March 2011,239 the Chancellor outlined the government’s ambition for the creative industries sector in the UK to become a “world leader”. Therefore this written submission will focus primarily on two areas within the inquiry’s Terms of Reference and the BFC’s remit: barriers to growth and ways to establish a strong skills base to support the creative economy. 1.4 The BFC is committed in its role to ensuring that barriers to growth for the industry are identified and that the skills, knowledge and training being taught in our education system matches the current skills demands of thriving businesses. Future proofing the economic prospects of our unique industry and preventing any potential skills shortfall is key to the expansion of the UK’s creative economy. Therefore the BFC believes it is vital to ensure that government and politicians fully understand the current concerns which have been identified by industry in these areas, in order to continue providing practical support that the industry requires and protect the fashion industry’s substantial economic and creative output for UK plc.

2. Establishing a Strong Skills Base in Support of the Creative Economy—Internships, Apprenticeships and Fair Access 2.1 The BFC continues to liaise with HM Revenue and Customs on unpaid internships in the industry, as recently reported in the UK press and through Written Parliamentary Questions in the House of Commons.240 2.2 Traditionally, those wishing to start a career in fashion have undertaken higher education courses. Students from Britain’s world renowned fashion colleges have been able to gain valuable technical skills and hands-on experience through internships and have obtained a better understanding of their strengths and the skills they will require to work within the industry. These placements often have stimulated a positive attitude to work, helped develop an understanding of the processes and roles within the fashion industry, given introductions to a wide range of players within the industry and have been considered vital for learning a broad range of skills to increase employability significantly. 2.3 There has also been a change in the annual retailer buying cycle of womenswear. Designers are facing pressure to showcase more than the traditional two collections a year to buyers, typically through catwalk shows at Fashion Weeks. This has placed increased pressure on new and emerging businesses that must create completely new collections each time. Twice a year is challenging enough; four collections gives not just additional creative pressure, but also places a strain on all parts of a designer’s business, from production to sales and emerging designers are facing the need to find low-risk financial strategy to showcase their pre- collections internationally, in order to achieve significant financial gain. 2.4 HM Revenue and Customs has now fed back their findings to the BFC from the ‘health check’ visits they made to a number of designers. While their feedback was constructive, HM Revenue and Customs have made it clear that legal alternatives to unpaid internships must be implemented with immediate effect. 2.5 In light of this, the BFC continues to assist designer businesses to take positive steps to ensure that they are operating within the law and continues to actively support the need for a change in culture across the 239 HM Treasury (2011) “2011 Budget statement by the Chancellor of the Exchequer, the Rt Hon George Osborne MP”, can be accessed at, www.hm-treasury.gov.uk/2011budget_speech.htm (accessed 14 November 2012). 240 Hansard (2012) WWritten Parliamentary Question: Work Experience”, can be accessed at www.publications.parliament.uk/pa/ cm201213/cmhansrd/cm120912/text/120912w0001.htm#12091231001707 (accessed 14 November 2012). cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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whole creative industries for paid, skilled work opportunities by beginning to create tools and resources with Creative Skillset. 2.6 The BFC recognises that it is important at this time that skills and employment opportunities are not lost and government urgently recognises the detrimental economic impact the industry could potentially encounter through HM Revenue and Customs’ immediate enforcement; an immediate technical skills shortfall experienced by some businesses and a vacuum of opportunity for the large pool of graduates leaving college each year needing experience. 2.7 The BFC believes that the government must therefore agree to a cross-departmental transitional period in partnership with key industry stakeholders, to develop and implement the required long-term, industry specific solutions on clear vocational and higher educational pathways. Designers, many of which are micro- businesses, operate with minimum resources (ie issues with access to finance, studio space, HR and business support) and the industry must work in partnership with government to address the potentially significant skills and job shortages which will substantially impact on the economic output of the fashion industry. 2.8 The BFC is also actively exploring a number of approaches to provide solutions to these challenges that are faced. It is working alongside Creative Skillset looking into apprenticeships and careers advice at all levels for individuals, employers and educational establishments and how these can be designed to secure the economic output of the creative industries, alongside the UK’s current and outstanding higher education offer. 2.9 This work must result in a ‘parity of esteem’ between the academic and vocational pathways, ensuring fashion apprenticeships are seen as a gold standard for technical skills education and promoting excellence to secure future employment. Apprenticeships need to be perceived as a more valued qualification and careers advice in schools does not currently reflect this, forming a cultural barrier to their substantial uptake once established. 2.10 The BFC is also working in partnership with the Designer-Manufacturing Innovation Support Centre (DISC) at the London College of Fashion, alongside the UK Fashion and Textiles Association for textiles and manufacturing. This is outlined further in section 3. 2.11 It is vital that an effective apprenticeship programme is implemented at the right skills levels, as well as modifying current student placement arrangements to secure opportunity for future generations and maintain the UK’s competitive and creative advantage. 2.12 Designers have expressed that they struggle with the financial and bureaucratic constraints of the current apprenticeships system alongside their demanding production schedule. Current provision does not address the high technical, business and HR skills to tackle the business need. 2.13 The result of this is that some designers, rather than engaging with the apprentice model, are starting to move towards sourcing students (and potential employees) from elsewhere, including international EU programmes such as Erasmus241 or Da Vinci.242 These programmes significantly eliminate business costs and provide full payment of the student during the time they are working with the designer. Such schemes are beneficial to designers, but they do have the potential to limit British students’ opportunity to secure the experience and skills required to succeed in the industry. 2.14 If this trend is to be reversed, access to apprenticeships must be adapted to enable British students to have equal access to opportunities in the UK. This may require the extension of apprenticeships to those who have already completed a higher education course. 2.15 Through meetings with designers, the BFC notes that there is an expressed interest for the development of a higher level apprenticeship ‘conversion course’ after graduating from university. These would potentially provide a suitable means to replace unpaid internships for fashion graduates, aimed at adding technical and business skills to the design and marketing skills learned as part of their degree. 2.16 Presently, potential apprenticeship candidates who have already undertaken higher education are not eligible for funding and would be required to take on a further loan, on top of already increased student loans. Moreover, as no approved frameworks are in place for higher apprenticeships within the fashion industry, it would take a considerable period of time before it could become a viable option. This limits the industry’s capacity to mitigate the current concerns it has finding a suitable way to equip graduates with the technical and business skills needed, with the loss of unpaid internships. 2.17 As such, the BFC believes that one size fits all business support schemes of this nature are not proving as successful in the creative industries, against other sectors. Whether dissemination of information, application processes, qualifications or method of delivery, the specifics of individual sectors, such as fashion, within the creative industries need to be addressed in any future apprenticeship scheme to ensure talent creation and development. 241 European Union (2012) “International Exchange Erasmus Student Network”, can be accessed at www.esn.org/ (accessed on 14 November 2012). 242 European Union (2012) “Leonardo Da Vinci Programme”, can be accessed at, http://ec.europa.eu/education/lifelong-learning- programme/ldv_en.htm (accessed on 14 November 2012). cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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2.18 Therefore the BFC has responded to the call for evidence for the Richard Review to express these considerations, as well as a number of other barriers preventing the industry from engaging with them going forward. The BFC looks forward to the publication of the Review’s recommendations at the end of November 2012. 2.19 In conjunction with its work on apprenticeships, the BFC is also liaising through the BFC Colleges Council to explore the creation of a placement framework for students within the timeframe of their courses, which complies with current National Minimum Wage legislation. 2.20 Colleges are doing a great deal of work independently already within degree course structures, but there are differing approaches (for example, length of placement or whether placements are available across all fashion courses at the educational institutions). It may be that a centrally co-ordinated process could signiﬁcantly improve opportunities for students (ie the level of technical and business skills which can be developed during key points such as London Fashion Week) and provide a valuable resource for designers. This would require support from government to protect funding to our higher education institutions and provide pathways for students to be able to afford such placements, for which they are often charged for through their recently increased university fees without remuneration. 2.21 It should also be acknowledged that under current National Minimum Wage rules, these placements can also be unpaid if they satisfy HM Revenue and Customs’ criteria regarding work experience within higher education. The BFC strives to ensure that those with talent are able to access appropriate opportunities, suitable remuneration for their work and high-level training that enables them to ﬂourish within industry. Therefore the BFC seeks to establish meetings with government to see how this can be overcome for both designer, who is limited in resource, and for students who requires fair payment for the work they undertake, against the backdrop of increased university fees. 2.22 It is of vital importance that we continue to inspire and attract future talented and individuals to come and work within the industry, enabling UK fashion designers to maintain their competitive and creative edge in an increasingly competitive global marketplace and against challenging economic conditions.

3. Barriers to Growth—UK Manufacturing and Government Funding 3.1 “The last 15 years have seen a dramatic fall in UK manufacturing as emerging markets have become more competitive”.243 There are however still some opportunities for UK manufacturing in luxury and bespoke goods and over half the designers showing at London Fashion Week make some of their collections in the UK.244 3.2 Manufacturing in the UK is central to supporting new and emerging designers in the high-level production of their collections and plays a key part in internationally promoting Britain’s existing reputation as a luxury and bespoke manufacturing nation. Therefore the BFC recognises that the UK must optimise the power of “Made in Britain” both at a designer and retail level and maximise the “2012 effect”, so that growth can be stimulated for the creative economy. In support of this, the BFC continues its work in conjunction with the Fashion Manufacturing Alliance245 and helps to develop tools for designers wishing to manufacture in the UK. 3.3 The BFC recognises that international spending patterns (particularly in emerging markets) on UK luxury and bespoke goods has increased substantially and now more than ever government must create a climate which advances existing retail interest in quality and luxury products, in line with this positive consumer response. Moreover, government must actively continue to minimise barriers experienced by UK designers who seek to trade in emerging international markets. 3.4 The BFC believes that this can be achieved in a number of ways. The BFC continues in its efforts establishing British designer fashion within emerging international markets through LONDON show ROOMS246 and receives vital public funding support to do so. 3.5 However delays to the conﬁrmation of some public funding could have potentially severe knock-on effects to the planning of certain activities. Delays have ranged between six weeks to six months, dependent upon whether it is considered a “core activity” or a new project (for example, our recent LONDON show ROOMS in Hong Kong). This funding is critical to the success of such projects and valued highly by the industry, but at present it is difﬁcult to assess the funding opportunities available going forward and create a long-term strategic plan to advance. 3.6 The BFC also recognises the importance of focusing on the next generation of manufacturing talent, addressing the inevitable loss of skills expressed in section 2 of this submission. The BFC works in partnership with the Designer-Manufacturing Innovation Support Centre (DISC) at the London College of Fashion, 243 BFC (2011) “Future of Fashion: Strategic Considerations for Growth”, can be accessed at, www.britishfashioncouncil.com/ uploads/media/62/26140.pdf (accessed 15 November 2012). 244 Ibid. 245 Fashion Manufacturing Alliance (2012) can be accessed at, www.fashionalliance.co.uk/ (accessed 15 November 2012). 246 British Fashion Council (2012) “LONDON show ROOMS”, can be accessed at www.londonshowrooms.co.uk/ (accessed 15 November 2012). cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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alongside the UK Fashion and Textiles Association to address the shortage of skilled machinists and technicians in small manufacturing units, particularly in the London area. 3.7 There is an urgent need to address this particular skills gap in as, unless these manufacturers are able to increase capacity with the designers as they grow, there is a strong risk that a large proportion of production will be moved offshore and further diminish UK fashion manufacturing and design. 3.8 Moreover, experienced and skilled individuals need to be attracted, trained and promoted to a career in fashion manufacturing in order to maintain the UK’s current skills base. Anecdotal evidence suggests that manufacturers are losing approximately 10% of their workforce through retirement, sickness and maternity leave and this will mean that a substantial skills gap could be experienced in the next few years. 3.9 The BFC continues in its dialogue with government and is currently working to commission research, mapping the current manufacturing picture here in the UK and reassessing the government’s outdated reporting in this area. With this information and coupled with the ongoing work of the industry, the BFC hopes to identify the latent demand for UK manufacturing facilities and focus on new talent, skills required and cutting- edge methods of production to strengthen the creative economy. November 2012

Written evidence submitted by the Greater London Authority 1. The Mayor of London has a key role to play in supporting and championing the creative industries in London. Through his statutory Cultural Strategy247 the Mayor works in partnership with a range of external bodies to promote creative businesses to markets across the world and provide them with targeted support. The Mayor’s investment in the creative industries encourages overseas clients and brings a wider global focus to London. The Mayor has also taken the lead on a number of crucial areas, such as apprenticeships, which are essential for growing the creative sector. 2. We are working to develop a Growth Strategy for the Creative Industries in London as a key part of the Mayor’s revised Cultural Strategy. This would effectively join together all the elements that would make the creative industries thrive in the capital—from business support, to skills and education, from promotion to tourism. 3. The Mayor agrees with the Prime Minister that “now is the time” to invest in the creative industries248 as a key growth area for rebalancing the economy. The Mayor also supports the view of the CBI that “If the UK is to achieve a balanced, high growth economy, it is vital that the key strengths of businesses in the creative sector are nurtured.”249

How best to develop the legacy from the Olympics and Paralympics of the display of UK talent in the creative industries in both Opening and Closing ceremonies and more generally in the design of the Games 4. The Opening ceremonies would not have been the success they are without a healthy publicly subsidised sector in the capital. The Games showcased talent whose careers have been nurtured through public funding, not least Bradley Hemmings and Danny Boyle. Many of London’s risky creative successes started as a result of public subsidy, not least through bodies such as The Arts Council. War Horse started out at the publicly- funded National Theatre, before going on to achieve huge success in the West End, Broadway and finally being adapted into a film by Steven Spielberg. Through targeted investment, the Mayor ensures that public funding supports private sector investment to sustain and grow the creative industries. 5. The Mayor is keen to raise the profile of the capital’s world class talent. The Mayor will continue to emphasise London’s pre-eminence as an international creative hub, whose skills, talent and infrastructure mean that London can deliver the most complicated capital projects on time and on budget, while at the same time delivering world class creativity and design. Following the delivery of the 2012 Games, the reputation of London’s creativity has never been higher and we must make the most of this opportunity. 6. The skills of London’s creative talent are in demand across the world, from Norman Foster designing Beijing’s airport to Christopher Nolan directing the latest Batman trilogy for Warner Bros. And yet, our ability to deliver the 2012 Games—and deliver it so well—still seemed to surprise many of us as a nation. We are keen to capitalise on this new-found confidence eg by working strategically with public bodies such as UK Trade and Investment to champion and promote London’s creativity, particularly to overseas investors. 7. Initial findings from the University of Liverpool suggest that the London 2012 Festival was the largest festival ever staged in the capital. The Festival brought together a range of partners, many for the first time. The programme included Unlimited, the largest ever programme of commissions for disabled and deaf artists. The Games offer an opportunity to build on the raised profile of these artists, and to find ways of encouraging ongoing partnerships. For example, future bids for major sporting events should also consider how to integrate culture alongside them. 247 http://legacy.london.gov.uk/mayor/culture/cultural-metropolis/docs/cultural-metropolis.pdf 248 www.bbc.co.uk/news/uk-politics-19051220 249 www.cbi.org.uk/business-issues/creative-industries/ cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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8. London is the growth engine for the UK’s creative industries, and London’s digital economy is the largest in Europe. Where digital crosses other creative sub sectors (from fashion to music, media and art) new market opportunities emerge. But we need to increase awareness of these opportunities and how businesses can exploit them. 9. The capital’s creative industries festivals play an important role in promoting UK talent and attracting significant overseas investment. This year, the Mayor invested £2.3 million in London’s creative industries festivals (London Design Festival, London Fashion Week and the London Film Festival). The return on this investment is significant. London Fashion Week is worth almost £110 million to the capital annually. Last year, London Fashion Week’s International Guest Programme attracted 70 VIP buyers from 13 countries who placed orders for British designers worth almost £75 million. The London Design Festival attracts around £6 million in sales. This year, the Mayor invested £1.3 million in Film London to deliver inward investment of £110 million for London. He will continue to champion these activities in London as key annual showcases and inward investment opportunities for the creative industries. 10. The 2012 Games was the most digital event ever held. This was a great showcase for our small and medium-sized enterprises (SMEs), many of which have benefitted directly from the Games—50,000 SMEs have won contracts totalling £5 billion. With iCITY as the preferred bidder for the long leasehold of the Press Centre and Broadcast Centre (which proposes to develop a digital hub with a design, research and technology centre that will generate more than 4,000 jobs and training opportunities)—the creative and tech legacy will be lasting. London is investing in the underpinning infrastructure to make this happens (such as through London’s Super Connected Cities Plan). 11. There are a large number of creative practitioners and artists located around the Olympic Park (in Hackney Wick and East London) as well as a growing number of creative/digital business. There are potentially some global players in the area, both located in the Olympic Park and elsewhere, plus world class Higher Education Institutions—Birkbeck in Stratford, University College London (at Carpenters) plus Loughborough as part of the iCity development. We need to bring these players together (physically and virtually) to create a virtuous circle of support and growth in the area and beyond. 12. The Mayor is also working with his promotional agency London & Partners to develop a tourism strategy for culture and creative industries, which can support a growth strategy for the creative industries in the capital. London lags behind some other cities such as New York when it comes to promoting UK culture locally, nationally and internationally and we need to improve how we champion British creativity, entrepreneurialism and innovation as part of this wider promotion strategy. 13. During the Games, the Mayor launched the World Cities Culture Report 2012 which compared London’s culture and creativity with eleven other world cities. The study was the largest exercise of its kind and was unprecedented in depth and scale. The report found that throughout the world, in major cities as diverse as New York, Shanghai, Istanbul and Mumbai, culture and creativity is as important to their success as finance and trade.250 14. The Mayor has established a new world cities culture forum with the ten cities aimed at capitalising on the significance of culture to cities across the world, socially and economically. He plans to bring the cities together each year for an annual summit aimed at better advocating for culture across the world, and will publish new data every three years. As a legacy of the 2012 Games, the World Cities Culture programme provides an important opportunity to produce more comprehensive global research about the economic impact of culture in cities; the impact on employment; and the shift from consumption to production ie how individuals and groups are increasingly creating culture for themselves.

Barriers to growth in the creative industries—such as difficulties in accessing private finance—and the ways in which Government policy should address them. Whether lack of co-ordination between government departments inhibits this sector 15. Government policy towards culture, business and education needs to be fully joined up to deliver the most effective growth strategies for the creative industries. For example, the visa system should act as a catalyst for growth and not a barrier. 16. In the same way, the Mayor has an important role to play to ensure that the capital’s next generation has the skills creative employers need, that London businesses are getting the right support, and that British creativity is being promoted overseas. 17. The Mayor’s Education Inquiry final report251 (October 2012) underlined the problem of youth unemployment and how crucial a good education and access to employer-led insights into careers pathways in the capital are for young Londoners, especially in a global city which attracts talent from around the world. The Inquiry has set out a number of recommendations (Numbers 6 and 7) which can help tackle some of the barriers to young Londoners taking up labour market opportunities in the growth in the creative industries. 250 www.worldcitiesculturereport.com/ 251 www.london.gov.uk/strategy-policy/mayors-education-inquiry cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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18. The GLA will be taking forward the Education Inquiry’s recommendations for establishing a “Gold Club” of schools that are “bucking the trend” of low aspiration and achievement and a London Schools Excellence Fund. This would work alongside the Gold Club to help schools make substantial progress on the most pressing priorities such as literacy, numeracy and raising standards in science, technology, engineering and maths. 19. So much can be done to bring together science, art and design in the classroom, and at the same time integrate the creative industries across the curriculum. In a pilot project for the BFI, the numbers of young people wanting to study languages at A-level rose by one fifth as a result of cinema being embedded within the students’ MFL curriculum.252 Young people could be playing maths and science games to help them make the connection between their learning and the wider world. They could be coding and learning to program. The next generation could be doing more than visiting websites and playing games—they could be learning to build them. Additionally, increased business engagement in schools (different sizes and types of businesses) will be critical to inspiring young people in the industries of the future. 20. But we also need to ensure that there are opportunities for young people when they leave school. Another barrier to growth is the outsourcing of manufacturing, particularly overseas. To give one example—a lack of skilled machinists in high end fashion means that British businesses are losing out to competition in mainland Europe. There is a need for apprenticeships and vocational training to be better aligned with demand. 21. The Government’s new university technical colleges (UTCs) and free schools initiatives are also pioneering innovative teaching in relevant subject areas, particularly STEM, and engaging industry in high quality curricula. The Mayor wants to support this approach and has established his own academies programme, TFL sponsorship for Greenwich UTC, and a free schools unit to facilitate more free schools in London. 22. Embedding higher education more deeply into the “innovation ecosystem” will be key to supporting business start-ups and business growth, where collaborative working across disciplines and sectors can lead to the cross fertilisation of ideas and innovation. This entrepreneurial culture and collaborative working needs to be championed, supported and clearly sign posted (given the complexity of London’s institutional landscape), and the benefits to creative SMEs clearly articulated.253 23. Business support and incubator space provided through universities is likely to be all the more important in a sector where graduates are more likely to take the self employed route from a young age. 24. The incentives to facilitate closer collaboration between universities themselves also need to be in place, in what is a highly competitive higher education sector. 25. The Mayor has a target to generate 250,000 apprenticeships places over the next four years. This is a challenging target which builds on the success the GLA has achieved so far, and which will be of benefit to the creative industries alongside other sectors. 26. To achieve it will require close working with businesses, particularly promoting the offer to small and medium sized businesses and ensuring that they are aware of the support available. The Mayor is committed to helping with the coordination of sector and trade bodies to pull together and coordinate the demand for apprentices, ensuring small businesses have the right information and the right support from training providers. 27. The GLA will also focus on driving up the quality and range of apprenticeship options for employers, ensuring that any business in London can find an appropriate apprenticeship to meet the needs of their business. The Mayor will continue our high profile campaign working directly with some of London’s biggest businesses to embrace the apprenticeships challenge—by securing and promoting high profile change within London’s business community we will continue to shout the message that apprenticeships are good for business as well as Londoners. 28. The Mayor is committed to making sure that our apprentices are supported financially by implementing, as soon as possible, a travel concession on the London transport network as well as ensuring that the public sector steps up to the plate. We will lead by example by employing 1,000 apprentices per year either directly within the GLA Group or across our contractor workforce. 29. Finance and fiscal incentives can provide valuable and reliable income streams for creative activity. Supporting businesses is an essential part of sustaining city success and the creative industries need specialised business advice. However, generic support and advice services for businesses do not necessarily serve creative businesses well, leading to lack of confidence and low-take up. Creative businesses require specialised tailored support which can include marketing and export development and mentoring by successful creative entrepreneurs. Workplaces that bring together creative entrepreneurs are increasingly popular and provide positive spill-overs that inspire new collaborations, products and services. 30. The perception that creative industries are inherently risky needs to be challenged as it leads to a reluctance among banks to lend to creative businesses. A recent report found that 49.7% of creative new firms in the creative industries were still trading after five years, compared with 46.9% in the economy overall.254 252 www.bfi.org.uk/about-bfi/policy-strategy/film-21st-century-literacy 253 The Mayor supports ‘Creativeworks London’ and ‘London Fuse’, AHRC and ERDF respectively funded knowledge exchange programmes www.creativeworkslondon.org.uk/ ) 254 Risky Business (Demos, 2011) cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The report found that the “survival rate” for creative businesses was the fourth best in the economy, higher than manufacturing and retail, and no different to real estate. 31. SMEs in London continue to raise with the Mayor their view that inadequate bank lending since the recession began has held back their ability to access ﬁnance to aid London’s economic growth—the Federation of Small Businesses (FSB) London’s most recent SME survey showed 49% of respondents think credit availability is poor.255 London’s global position as a centre for venture capital means there is a great deal of investment being made, but this is not reaching all types of SME. We therefore support the government in its efforts to ensure that banks are lending to SMEs.

The extent to which taxation supports the growth of the creative economy, including whether it would be desirable to extend the tax reliefs targeted at certain sectors in the 2012 Budget 32. The Chancellor’s plans for corporate tax relief for animation, high-end TV and games could reverse a trend of UK productions being made overseas. Tax relief for video games alone could help increase that sector’s contribution to the UK economy by £280 million over the next five years. 33. The Mayor strongly supports the Government’s plans to extend tax reliefs to these sectors. 34. The film tax relief has shown how support for the creative industries can make a huge difference. London is now one of the busiest film production centres in the world, competing with New York and Los Angeles for the top spot. Over 75% of the UK’s industry is based in London and the surrounding film studios. London has an international reputation as a film friendly city with a strong film culture. The UK Film Council estimated that the introduction of film tax relief was responsible for the creation of 30,000 jobs—three quarters of which were in London—and was the major factor in a huge increase of inward investment.256 35. Our ambition is for London’s future television production to rival HBO (Home Box Office), our animation culture to rival Disney or Studio Ghibli, and our games production to continue to be world class. The success of London’s film industry over the past twenty years shows what sustained investment can achieve. 36. Without support, the animation, high-end TV and video games sectors would be at risk of underinvestment. The tax reliefs will create a more stable production base for animation, high-end TV and video games which will foster a stronger creative industries culture in London. 37. There is a huge potential for growth in these sectors in London, and the Mayor supports this measure as crucial to strengthening the capital’s infrastructure and production base.

Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this 38. A growth strategy for the creative industries in London starts in primary schools. With this in mind, the Higher Education (HE) sector has a crucial role to play in ensuring that the training of primary and secondary teachers—particularly in science, technology and computer science—keeps up with the pace of innovation in the sector. 39. The Mayor’s Education Inquiry recommended bringing together schools, Further Education (FE) and HE institutions and employers to develop better links between the education and business sectors, ensuring that training given to young people helps meet London’s current and future skills needs. This should include developing new ways to increase the supply of high-quality work placements and improve access into apprenticeships.257

The importance of “clusters” and “hubs” in facilitating innovation and growth in the creative sector. Whether there is too much focus on hubs at the expense of encouraging a greater geographical spread of companies through effective universal communication 40. The clustering of facilities and talent in London is one of the reasons the capital is so attractive to overseas investors. The World Cities Culture Report 2012 cited the “critical mass” of culture in world cities as one of the reasons for their success.258 For a film studio or games developer, London offers a “one-stop-shop” of pre- and post-production expertise. This brings millions to the capital, strengthens our culture, and helps sustain our talent pool, leading to a virtuous circle of more amenities, an even more vibrant cultural and technical environment, and a greater attraction for investors. Therefore we do think “clusters” and “hubs” remain important. 41. The success of “Tech City” in Shoreditch exemplifies this, where the clustering of firms (large and small) has enabled labour market pooling, generating knowledge spillovers between different firms and across different sectors cross-fertilising ideas and generating new start-ups, the attraction of related services (such as accountants and legal specialising in digital), amenities and infrastructure (from the growth in incubator spaces to the bottom up provision of skills (such as Rich Mix’s “Dev Camp” project to teach kids to code), to faster 255 FSB London Small Business Index Q3 2012. 256 The Economic Contribution of the UK Film Industry (Oxford Economics, July 2007) 257 www.london.gov.uk/strategy-policy/mayors-education-inquiry 258 www.worldcitiesculturereport.com/ cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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broadband (for example the “Shoreditch Network” of providers). This in turn becomes self-perpetuating as the talent pool, cluster of ﬁrms and amenities attracts more ﬁrms and workers and investors.

The work of the Creative Industries Council and other public bodies responsible for supporting the sector 42. We would welcome more clarity about the outcomes of the Creative Industries Council so far, and whether the Mayor has a role to play in supporting its work. 43. This year, the Mayor has invested £1.3 million in Film London to deliver inward investment of £110 million for London, generate 2,500 employment opportunities, sales of £3.3 million, and £2.2 million of investment into UK production. Film London pays a hugely important role to support the capital’s ﬁlm industry and its businesses. With 75% of the UK industry based in London, Film London has been instrumental in facilitating the growth of inward investment and jobs in the capital. 44. The Mayor also works with a range of other public agencies—from BFI to UKTI to Skillset—whose role in helping shape a growth strategy for the creative industries will remain crucial. November 2012

Written evidence submitted by Josie Barnard Summary My recommendation is that the teaching of Creative Writing is included on the Committee’s list of creative industries and supported as such. Creative Writing courses feed other creative industries and provide transferrable skills that buoy British Industry in key ways.

1. Me I am submitting as an individual who has extensive experience of teaching Creative Writing in a wide range of further and higher education institutions. I am currently Senior Lecturer in Creative Writing with Journalism at Middlesex University (http://www.mdx.ac.uk/aboutus/staffdirectory/josie-barnard.aspx). I have in addition taught Creative Writing on the MA at Goldsmith University and the BA at the London Metropolitan University, at FE colleges including the beacon status Mary Ward Centre and the City Lit, and at publishers’ initiatives including the Faber Academy and the ACE-funded Tindal Street Masterclasses in Birmingham. I am also a practitioner (published novelist and non-ﬁction writer).

2. My Recommendation My recommendation is that the teaching of Creative Writing in further and higher education is included on the Committee’s list of creative industries and supported as such. The pedagogy of Creative Writing makes a vital contribution to the creative economy, contributing to the creative economy’s skills base in two main ways: (i) Creative Writing courses supply other creative industries with students, graduates and post- graduates who can write content; (ii) Creative Writing courses aid the buoyancy of British industry including by supplying students, graduates and post-graduates with transferrable skills that include: (a) enhanced abilities in clear communication; and (b) enhanced abilities in creative thinking.

3. Overview In its 2001 Creative Industries Mapping Document, the DCMS lists “publishing” as a creative industry. But this category only includes writers who get published by commercial publishers. Students of creative writing who don’t get commercially published contribute to the creative industries in ways that I believe help future- proof the British economy. Of the “issues” named in the Committee’s call for evidence, my focus is on: “Ways to establish a strong skills base to support the creative economy, including the role of further and higher education in this”.

4. Why CW teaching is a creative industry (i) Provides Content Creative Writing courses supply other creative industries with students, graduates and post-graduates who can write content. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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(a) Content Creative Writing students, whether or not they are published commercially, go on to supply content across the creative industries. Creative Writing graduates often join the work place in areas on which the Committee feels it’s important to focus, particularly ﬁlm, television and games sectors. Without good “content”, which Creative Writing students are trained to provide, the ﬁlms, television programmes and games generally have much less value. Career mapping of such Creative Writing students would see them go into industries including Advertising, Art and Antique Markets, Film and Video, Interactive Leisure Software, Music, Performing Arts, Publishing, Software and Computer Services and Television and Radio. This career mapping would spread out more generally across the public and private sectors in communication and design roles.

(ii) Provides Transferrable Skills Creative Writing courses aid the buoyancy of British industry including by supplying students, graduates and post-graduates with transferrable skills of two main kinds. (a) Enhanced abilities in clear communication Articulate managers: Reports show that there is a rising need in British industry for articulate managers. And, it is anticipated that this need will continue rising as the century progresses. The Universities UK report “Changes in Student Choices and Graduate Employment” (2010) points out that “86% of employers consider good communication skills to be important, yet many employers feel that graduates cannot express themselves efficiently”. Learning to communicate effectively is central to any Creative Writing course. In assessing the changes in occupational structure in England 1987–2017, the UKCES report, “Skills for Jobs: Today and Tomorrow” report confirms that the demand for articulate, persuasive managers and senior officials will continue rising as the 21st century progresses. Again, teaching articulacy and the ability to persuade are central to Creative Writing courses. New technologies: In business previously, it was possible to “buy in” writers for discrete tasks (a publicity campaign, for example, could be designed and delivered by one PR company or department over a period of time). In the 21st century, new technologies mean that more employees must have clear, flexible writing skills. Many employees have to use the social media (Facebook, Twitter and so forth) as a networking and marketing tool as part of their day-to-day work responsibilities. Commissions, contracts, sales stand or fall on these employees’ abilities in terms of clarity and persuasion. Global market: Globally, English is the key business language. We are world leaders in this area and—in an increasingly competitive world market—we should capitalize on that. Internationally, many businesses have English as a second language. Whether it’s for instruction manuals, press releases or top executive documents, clear expression—more often than not in English—is essential. (b) Enhanced abilities in creative-thinking Dissemination: Clarity of expression is important for those in business using new communication technologies, of course. It is also increasingly crucial in today’s workplace that users of such technologies can: — assimilate messages from multiple sources; — manage such inputs resourcefully and swiftly; — turn such inputs into one meaningful, persuasive, relevant output; and — remain adaptable as new technologies emerge. Creative Writing courses teach students how to become proficient and resourceful multi-modal communicators. Management/leadership: Many of today’s Creative Writing students are tomorrow’s managers/leaders. Again and again in my teaching, I’ve seen managers and leaders who find that they need to boost their workplace creativity and do so by coming to Creative Writing classes. Students who are taught Creative Writing are taught creative thinking. Creative thinking is clearly essential in business development and business management and feeds directly into the Government’s aims as outlined in the Prime Minister’s speech on supporting economic growth, cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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which highlights the desire “to create the right environment to start and grow a business, making sure that people working in the creative industries have the right managerial and leadership skills to do so”. Creative Writing courses teach articulacy and persuasiveness, which is of clear value to managers/leaders. In addition, three key areas in which Creative Writing skills aid managers/ leaders can be identiﬁed: — Ethics: the ability to move between different points of view is central to Creative Writing courses: this can help in terms of empathy in ways that facilitate solutions (for example at the customer interface); — Structure: Creative Writing students must learn both how to devise new structures (ﬁrst drafts) and alter existing structures (the editing process): that is, Creative Writing helps leaders/managers see the bigger picture of an organization, identify problems and implement organizational solutions; — Engagement: the application of Creative Writing skills that relate to understanding points of view and structure can enhance engagement both of managers/leaders and the staff they manage. Career mapping in this context sees students of Creative Writing going to (and gaining promotion in) a wide range of posts across industry, from PR to editorial to leadership.

5. Rounding Up

(i) Creative Writing Courses

Job-seekers’ and professionals’ thirst for Creative Writing skills. Creative Writing classes remain buoyant in a tough climate. Indeed, Creative Writing courses and programmes including the Faber Academy and the Royal Literary Fellowship Scheme (RLF) are, despite the current economic and political climate, expanding, new courses are launching. This is testimony to the transferability and value of the skills Creative Writing courses provide. The RLF scheme puts published novelists in universities to help 3rd year university students apply creative writing skills to practical writing (ie, the Fellows help students from all disciplines to, amongst other things, construct CVs and job applications). The RLF started in 1999 with eight fellows. The success of the project surprised the RLF; some 90 writers are now working in 67 universities. Undergraduates are seizing on Creative Writing skills for the boost they will give them across the board in the jobs market. Similarly, the publishing house Faber began to run Creative Writing classes recently under the banner “Faber Academy” at prices that many in the market thought would hinder recruitment, and instead, they are having trouble keeping up with demand (they have recently introduced day classes as well as evening and weekend classes, and they increase their range of provision each time they publish a new schedule).

(ii) Individual Examples

Examples from past students. From my practice as a Creative Writing tutor (at FE, BA and MA level) and as a published writer, I regularly see how creative writing classes deliver transferrable skills. A manager who studied with me described how she gained a new understanding of structure through Creative Writing that helped her take macro company targets, break them down, and apply them locally on a micro-level. A television producer from a mid-sized ﬁrm who studied with me detailed how his fresh understanding of the best way to develop a narrative thread improved his spoken presentations and led directly to an increased number of contracts. Many other anecdotal examples could be supplied on request. Whilst there is an abundance of such anecdotal examples, hard statistical data that enables career- mapping of Creative Writing students is not available and the need for research in this area is urgent. November 2012 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by The Live Music Forum Today sees the launch of The Live Music Forum’s Copyright Campaign. A copy of the Campaign launch statement is enclosed or you can view it online at www.livemusicforum.co.uk/copyrightcampaignstatement.html The Hooper Report seems to satisfy many of the requirements of the music industry but we feel it offers nothing to the thousands of musicians who may never get near the charts but whose songs are popular in their own area and contribute in their small way to the copyright licensing revenue. For example, the collection of data on track play by DJs is virtually non existent in small clubs. Small local clubs are the best type of venue where an unknown band can hope to get its track played or requested, but the revenue collected for those performances is aggregated and paid out to more successful artists who have generated radio play. Other problems faced by small businesses struggling to survive are the seemingly excessive fees demanded by PRS and PPL. We have an example of a pub that pays £1,200 to PRS and £230 per year to PPL. But the venue only opens evenings on weekdays and considers 50–70 people attending a live music gig a good turnout. These amounts for copyright licensing in a small live music venue seem way too high to be considered reasonable. Our Copyright Campaign sets out four main demands: — A single license to cover all live and recorded music copyright. — A fairer system of distribution which includes plays of local artists on local radio stations and in local clubs, venues and festivals, then directs payments to the artists. — A lower rate of copyright licensing fees for live music venues presenting live music 100 times a year or less, to an average audience of a hundred or less. — A system of regulation on copyright collection organisations. The Live Music Forum speaks for people at the hard end of the music business, of whom there are many, and we hope that you will concur with our points and support our campaign. December 2012

Further written evidence submitted by Live Music Forum We would be grateful if you would allow us to present some important points for consideration as a new UK copyright system evolves. The implementation of the Copyright Hub is an excellent opportunity to make badly needed changes to the music copyright distribution and collection system in areas which have previously been ignored. Particularly the processing of recorded music track play information. Nobody could have foreseen the explosion of mobile discos in the late sixties and early seventies. Within a year there were suddenly thousands of non-registered, semi-professionals ﬁlling the dance halls and clubs that were previously the province of live bands. Their “performance” of playing top 20 records to an enthusiastic and receptive crowd fell under the category of “recorded music” for copyright licensing purposes, so the new DJs were free of any obligation to pay the artists whose records they were playing or to supply any information to the copyright distributors about the tracks they played. Since that time there have never been any serious attempts to improve this badly lacking system. Forty years ago the kind of chart and radio analysis which the copyright agencies base their distribution calculations on could have been deemed quite reasonable, considering that it was virtually impossible to have your song recorded unless you were signed by a record company or a publisher. That approach was outdated by the arrival of punk and independent record companies in the late 70s. The very nature of this movement prescribed that hundreds of tracks recorded in dingy studios by local bands would be played in public. At their gigs through the PA, as requests to DJs by followers in clubs, on local radio interviews and at small festivals. And now, 35 years later, there has been an even bigger technical explosion leading to home-recoding and self-promotion through the internet and social networking. The further you wind forward through this 35 year period, the less DJ’s playlists resemble the charts or top 500 on which many commercial radio playlists are based. From independently pressed vinyl records in the 70s to white label dance records in the 90s and the home produced content which is currently being produced, the actual diet of music in the larger world has become less like the standard format on which the distribution calculations are based. As musicians accessed the means to burn their own CDs on a PC or Mac, more “unpublished tracks” have been played in a wide variety of venues. Venues which have paid copyright licensing fees. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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The ﬁrst thing a songwriter is going to do when they have ﬁnally got a CD of their songs is to get it played by whoever and wherever they can, as often as they can. Imagine how many regularly succeed up and down England and Wales. Even CDs are becoming “old hat” now with Bluetooth, wireless technology and memory sticks taking over.

These days all marketing advice emails sent out by online music companies such as Reverbnation and CD Baby incite and inspire the creator to be pro-active in securing track plays by DJs at clubs, on radio, online and, in fact, any situation where their music might receive some exposure.

Like many others I am as pro-active as I can be in this department. But, in a sense, the effort is futile. Because, if I manage to get my track played in town anywhere, the royalties that are rightfully due to me will go to somebody else. Because, PRS will not be told about the performance of the track and I am not allowed to “self-report” the title, as with my own live performance of the song.

When you consider how many towns there are in England and Wales and the average number of venues entertaining crowds every week by featuring live music and DJs, you are talking about a lot of performances of tracks. A fair proportion of these will be the result of local lobbying. A fan or a musician can copy a track to a DJ in a club in seconds from phone or memory stick and young people are more in the habit of using every facet of current technology. If their perseverance gets them a play in public then they should be entitled to receive their fair share of copyright.

It seems to me that there are three ways to approach the problem. One is to get the DJs to do what they should have done all along, and that is to provide lists of tracks they “performed”, so that the artists can be paid.

The second is to employ technology in the identiﬁcation of tracks that have been played.

Audio recognition software might be the ﬁrst solution that comes to mind. However, there have been recent problems on youtube where media companies have issued numerous spurious copyright claims on audio to which they did not own the rights. I have personal experience of this and to be honest the copyright challenges were laughable but very time consuming in getting them dropped. These seem to have arisen as a result of the inefﬁciency of audio recognition software and a different approach might be necessary to reach a successful technical solution. Or, perhaps some simple piece of software could identify and report the output from a DJ’s laptop or similar device. If it could generate a report it should be an easy task for the DJ to email it to PRS/ PPL. It is only reasonable to expect some kind of effort to make it possible for the artists they chose to play to receive their fare share of copyright.

Alternatively, some form of self-reporting (as exists with PRS for live performances) for DJ and local radio station plays could provide non-charting musicians with a mechanism to recover their fair share of copyright. We feel it is vital that the new copyright system addresses this massive failing.

We have already provided examples of the effect that copyright licensing has on small live music venues in our Copyright Campaign Statement and a “single license” would no doubt aid small businesses of all kinds to manage their copyright commitments better.

As a working musician I have heard many stories from publicans about the heavy handedness of PRS and PPL. Some licensees, in fact, seem to be quite frightened of them, requesting anonymity. With an apparently considerable amount of power and income, we feel it is important that some regulation exists to curb any excessive behaviour of the rights collection agencies. Especially with regard to the collection of and level of fees applied to small venues.

There are hundreds of small live music pubs that might have a capacity of 100 or more but have to manage with attendances of nearer 40 and be happy. Licensees’ plight of falling attendances, especially following the smoking ban, have not been reﬂected in lower copyright licensing fees. We know of several examples where Copyright demands were “the straw that broke the camel’s back”, so to speak, in terms of the survival of the venue. Greater care needs to be taken in the calculation of copyright fees for small businesses constantly under threat in this harsh economy. It does not seem morally right that intellectual copyright should tip a business over the edge.

We hope you will consider our suggestions and give some priority to a wider distribution of copyright revenue and measures which will protect the fragile live music economy in small venues. January 2013 cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Written evidence submitted by Twentieth Century Fox

Good afternoon. I’d like to take you thru just a few slides to explain how we’re trying to create digital ecosystems to stimulate ownership of our content. We know that media consumption is going digital, hi def, to all screens small and large, and offering instant access to content. What we don’t know is whether consumers will continue to want to own the media experience (what we call sell-through) or merely to rent or subscribe to it through streaming services. The sell-through business model accounts for the large majority of the revenue and proﬁt of any given ﬁlm, meaning that the success of the movie industry depends heavily on persuading consumers to want to own content. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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And there are many options today that compete for our entertainment time and money. On this chart, we can see how many consumers are engaging in social networks and using the internet to stream movies and TV shows: about 3 million consumers of the Netﬂix/Loveﬁlm streaming service, 40 million annual Paid transactions of On demand VOD , and of course hundreds of millions to billions of video streams and social network participants globally.

Consumers in the UK also have invested in a wide array of technology products, many of which can be used to watch our content, much of which is transitioning to various digital formats. And this device penetration, which is as high in the UK as anywhere in the world, creates a signiﬁcant amount of consumer demand for content.

Indeed this device penetration in the UK is rather impressive, essentially matching that of the US for many device classes and certainly exceeding France and Germany, two markets by contrast that have extensive private copy regimes. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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To capture the consumers’ attention with digital products, we need to understand what’s good and what needs to be improved for consumers to invest their hard earned time and money. What’s good is mobility— using the Cloud to watch whenever you want and wherever you want and even to share digital content, but it’s still not easy enough to buy content in the ﬁrst place and get it to the big screen TVs that people are buying in ever greater numbers. And there remain concerns about the safety and privacy of information stored in the Cloud and not in our own homes on our own devices.

Since our success depends on satisfying new consumer demands, particularly with respect to sell-through content, we’ve seen an evolution of technologies that give consumers what they’re asking for with digital content, including with respect to additional copies of the purchased content.

Since 2008 in the UK we’ve provided digital copies, or the means to quickly transfer a lower-resolution copy of the movie from a disc they’ve purchased to their computers and portable devices. E-Copy, starting in 2011, gave another option to download copies over the Internet to these devices.

UltraViolet, now in half a million UK households, stimulates digital purchase by allowing consumers to stream content they own to any device at home or on the road as well as to make copies on up to 12 owned devices and to share with up to ﬁve family members. This content will be available through many UK retailers in the near future. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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And our newest venture, Phenix, which will continuously improve the entire digital experience by giving the best quality experience in the home on the large screen TV but also easily watching or copying content on the consumer’s portable devices. As simple as buy the content, hit play and instantly watch the highest quality movie possible, behaviors the consumer has come to enjoy over the past several decades.

UV together with Phenix takes advantage of the best consumer experiences with the Cloud and with the latest developments in device technology, thus stimulating takeup/sales of each.

And this is how we quantify these opportunities vs. risks. On this last slide we have two perspectives on how consumer spending will play out over time depending on how successful our digital initiatives become. I should add that neither scenario takes account of the negative impact of a new private copy exception.

This ﬁrst perspective is the forecast for the UK that extends recent trends without substantial consumer take- up of the digital programs we just reviewed. In this scenario, we’d expect the continued decline of consumers buying our content on disc formats or simply not beginning to buy electronically, which you see below the black dividing line here. These declines would exceed 10% per year. Instead, the ownership behavior of the past would be substituted in large fashion by lower cost rental or subscription options, primarily VOD and streaming services, which you see in the top two bars. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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And this is how we quantify that interest. On this last slide we have two perspectives on how consumer spending will play out over time depending on how successful our digital initiatives become. I should add that neither scenario takes account of the negative impact of a new private copy exception. This ﬁrst perspective is the forecast for the UK that extends recent trends without substantial consumer take- up of the digital programs we just reviewed. In this scenario, we’d expect the continued decline of consumers buying our content on disc formats or simply not beginning to buy electronically. These declines would exceed 10% per year. Instead, the ownership behavior of the past would be substituted in large fashion by lower cost rental or subscription options, primarily VOD and streaming services. On the right is the much more favorable scenario if we can persuade large numbers of UK consumers to take up the digital ecosystems we outlined, with all their ﬂexible usage rights and extra features, including with respect to additional copies. Now we see tremendous growth in total below the black line—consumers buying our content largely driven by digital ownership. Although we would still face long-term challenges, we would at least see our industry return to growth in the UK. cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Letter from Chair to the Rt Hon David Cameron MP, Prime Minister I am writing to ask if you will give your personal support to the bid to locate the Global Repertoire Database (GRD) in London. I understand that the decision on where to locate the GRD will be at least partly dependent on the level of political support in the relevant country. London’s competitors for the bid are said to be Berlin, Dublin and Paris. The Global Repertoire Database (GRD) would serve as a centralised, authoritative source of the metadata used to describe musical works. It is an industry-led initiative on behalf of songwriters, composers and publishers. The idea behind it is to provide, for the ﬁrst time, a single authoritative database of the owners of copyrighted musical works. Locating it in London would be entirely consistent with making the UK a global centre for copyright exchanges. Given the importance of the creative industries and their dependence on a strong and vibrant intellectual property regime, I trust you will join me in expressing your ﬁrm support for this initiative with all the opportunities it should provide for promoting the UK creative economy. The Culture, Media and Sport Select Committee is currently conducting an inquiry into support for the creative economy. Although we have not yet concluded this, it is already clear that a strong framework of protection of intellectual property rights is a key factor in the success of our creative industries. By locating the GRD in London, this will send a clear message of the importance that the UK attaches to these industries. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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I am also copying this letter to the Secretary of State for Culture, Media and Sport and to the Minister for Creative Industries. 19 March 2013

Letter from Rt Hon David Cameron MP, Prime Minister to the Chair Thank you for your letter of 19 March regarding the Global Repertoire Database (GRD). I have also received and replied to a letter from the Global Repertoire Database (GRD) Working Group in which they ask for support from the UK Government to locate the GRD’s headquarters and operational base in London. I understand that your letter was also sent to Vince Cable and Maria Miller and that they have replied expressing their and this Government’s strong support for this proposal. These are sentiments with which I very much agree. It is a pleasure to see industry working together proactively to make the licensing of music easier for both businesses and consumers. I am copying this letter to Maria Miller, Ed Vaizey, Vince Cable and Lord Younger. 11 April 2013

Letter from the Chair to the British Olympic Association My Committee has for some months been conducting an inquiry into support for the creative economy. One key aspect is how the legacy left by the Olympics, including the showcase of the opening ceremony, can be consolidated and built on. During our most recent oral evidence session on 26 March it became clear that this legacy is in danger of being severely compromised by evidently unnecessary restrictions arising from the application of the No Marketing Rights Protocol. These do not appear to have been adequately remedied by the subsequent Supplier Recognition Scheme. I am inclined to agree with our witnesses that this is a ridiculous situation. When British companies are bidding for contracts for the Rio Games, surely they should be given every opportunity to promote their achievements in London. I understand that responsibility for this issue has now passed to the British Olympic Association. As this is a matter which my Committee intends to pursue, I would therefore be grateful if you could set out the exact position and also explain why it is considered necessary to impede British companies in this way—long after the London Olympics have ended. 8 April 2013

Letter from the British Olympic Association to Chairman of the Committee We are of course very happy to share further information on the Scheme which we run in partnership with the Department of Culture, Media and Sport and UK Trade and Investment. We are in fact also meeting with Matthew Griffiths, Chief Executive Officer of Plasa in the next week and hope this will be a useful forum to discuss the concerns of his industry as well as explain the opportunities for London 2012 suppliers in more detail. As the organisation charged with administering the Scheme, we at the British Olympic Association (BOA) are committed to ensuring as many businesses as possible can showcase the important role they played in the success of the London 2012 Games. In recognition of this, we have worked intensively with the International Olympic Committee (IOC) to identify the maximum scope for suppliers to be able to promote the goods and services they provided to the Games. This resulted in the creation of the Scheme which as you know was launched in January this year. The Scheme is a first for the Olympics. The No Marketing Rights restrictions which London 2012 suppliers (and indeed previous Olympic suppliers) are contractually bound by in their supply agreements have never previously been relaxed after a Games. The Scheme will provide the vast majority of suppliers with ways in which to leverage the important role they played in the success of the London 2012 Games. All companies who supplied LOCOG, the ODA or one of their subcontractors and who were subject to No Marketing Rights are eligible to apply to the Scheme and to date over 670 London 2012 suppliers have benefited from the Scheme. This represents over 84% of the applications processed to date. In developing the Scheme we, together with the IOC, had to strike a balance between supporting the interests of London 2012 suppliers and our responsibility to ensure we do not infringe upon the rights of worldwide Olympic sponsors, whose long term support is essential to the future of the Olympic movement. In doing so it was necessary for certain categories of business to be excluded from the Scheme. We have worked with the IOC to keep the exclusions to a minimum and regularly review the categories in order to ensure as many cobber Pack: U PL: COE1 [O] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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businesses as possible can beneﬁt from the Scheme. For your information, a list of the excluded categories can be found on the Scheme website at www.srs2012.com/faq and we encourage all suppliers who think they may fall within an exclusion to seek further guidance from us. For those suppliers who do fall within one of the excluded categories, there are still ways in which they can use their experiences at the London 2012 Games to win new business and demonstrate their capabilities. All companies who supplied London 2012 can continue to factually refer to their work on the Games and indeed, have never been prohibited from doing so. Suppliers can, for example, make reference to their London 2012 work in client lists and in pitch and tender documents. Enclosed with this letter is a copy of the guidance we issue to those suppliers who fall within an excluded category. This guidance has been designed to help these suppliers maximise their involvement in the Games whilst still ensuring they do not fall afoul of the contractual conditions they signed up to in their supply agreements. We understand that the fact that some exclusions exist is a frustration for some suppliers, but given the rights of the worldwide Olympic sponsors and their vital role in ensuring the viability of the Games, some limitations on the Scheme are inevitable. I hope it is clear from this letter that we and the IOC have tried to be as ﬂexible as possible in order to support as many suppliers as possible. If we can provide any further information or guidance on the Scheme to you or other members of the Committee please do not hesitate to get in touch. Thank you again for your interest in the Scheme and for bringing the concerns of the Committee to our attention. 14 June 2013

APPENDIX LONDON 2012 NO MARKETING RIGHTS—GUIDANCE FOR SUPPLIERS EXCLUDED FROM THE SUPPLIER RECOGNITION SCHEME This document provides guidance for suppliers who are excluded from the Supplier Recognition Scheme. In particular it provides information on how they are permitted to reference the important role they played in the delivery of the Games.

What are the No Marketing Rights? These are the legal restrictions placed on LOCOG and ODA suppliers as well as their subcontractors. These London 2012 suppliers signed supply agreements which included No Marketing Rights clauses. These prevented them from proactively talking about or marketing their involvement in the Games. The restrictions were required to preserve the funding received from Olympic sponsors. Funding which was required to deliver a high quality Games in London and which, through worldwide Olympic sponsors, continues to be vitally important in ensuring the future viability of the Games.

Who do the No Marketing Rights apply to? No Marketing Rights continue to apply to suppliers who worked on the London 2012 Games and who were subject to No Marketing Rights clauses in their supply agreements.

For how long will No Marketing Rights apply? The No Marketing Rights are surviving contractual conditions and apply indeﬁnitely. Suppliers however can apply to the British Olympic Association for a Supplier Recognition Scheme licence. If successful, the licence relaxes the restrictions and enables the supplier to talk about their involvement in business to business communications including promoting their work on their website, at trade shows and in pitches and tender documents when competing for international contracts. If a supplier is not eligible for a licence, eg they fall within a category of business excluded from the Scheme, the No Marketing Rights continue to apply indeﬁnitely. These suppliers can however continue to make simple, factual statements about their work on the Games.

My company is excluded from the Supplier Recognition Scheme. What is my company permitted to do under the continuing No Marketing Rights? We recognise that every supplier played an important role in the Games. We also recognise how important it is for suppliers to be able to demonstrate the work they carried out and share their experiences when bidding for and working on future projects. Given this, there are a number of circumstances in which suppliers can continue to factually refer to their work on the Games. Highlighted below are examples of the types of activity that are permitted. Suppliers are encouraged to contact the British Olympic Association for further guidance. cobber Pack: U PL: COE1 [E] Processed: [24-09-2013 09:46] Job: 025213 Unit: PG01 Source: /MILES/PKU/INPUT/025213/025213_w069_michelle_SCE 101 British Olympic Association to Chair.xml

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Activity What is permitted Client lists The name of the client (eg LOCOG, ODA) plus a short description (20 words) may be included as long as: — other clients are included (minimum 5) — there is no special emphasis Pitch/tender documents An accurate factual statement about the supplier’s involvement in the Games may be used in a pitch document or presentation as long as: — the document is not made available beyond the group to whom the pitch is submitted — other examples of work are provided Verbal communications Suppliers may talk about the work they undertook in an informal business context as long as this is not marketing activity eg talking to a large group of potential clients Responding to media Suppliers may not instigate media enquiries or issue press releases about their enquiries work on the Games but when contacted by media may respond with a brief factual description of their work. Internal communications Internal communications to staff are permitted as long as the announcements are factual and proportionate. Academic conferences Suppliers may speak about their work in connection with the Games in an appropriate non-Games speciﬁc, educational context including at academic conferences and at general business conferences as long as: — other clients are included (minimum 5) — there is no special emphasis Academic articles may be permitted and approval should be sought from the British Olympic Association Awards Requests to submit entries for awards should be submitted to the British Olympic Association. The British Olympic Association will consider each request on a case by case basis.

What wording is permitted in factual statements? Suppliers should avoid creating an association with the Olympic and Paralympic Games and are asked to refer to all their work within the context of the London 2012 Games. ✓ Tom Smith Autos supplied repair services to the London 2012 Games X Tom Smith Autos supplied repair services to the Olympics

What is not permitted under the No Marketing Rights? Suppliers who have not been granted a Supplier Recognition Scheme licence and are still bound by No Marketing Rights should avoid any form of marketing or promotional activity that includes reference to their work on the London 2012 Games. In particular suppliers should not use any Games logos, fonts or imagery (including photographs) and should not run any advertising or PR campaigns which promote their work in connection with the Games.

For Further Information Requests and enquiries should be directed to [email protected]

The Stationery Ofﬁce Limited 09/2013 025213 19585